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Huawei’s new plan may help it circumvent U.S. sanctions

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Chinese smartphone maker Huawei, which has been badly hit by U.S.-imposed sanctions, is reportedly working on a new plan that could potentially help it circumvent those restrictions, Bloomberg reports. The plan involves the company licensing smartphone designs to some of its existing partners, which would then source parts and technology from entities that Huawei itself is barred from dealing with.

The companies that Huawei intends to work with include a little-known firm called Xnova and another company called TD Tech Ltd. Interestingly, Xnova is the subsidiary of a larger Chinese state-owned company called China National Postal and Telecommunications Appliances Co. (PTAC), which already sells Huawei’s existing Nova series devices on its own e-commerce platform. Both these companies aim to license smartphone designs from Huawei, but will most likely sell these devices under their own brand names.

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The ongoing sanctions — in place since May 2019 — effectively prevent Huawei from dealing with companies like Taiwan Semiconductor Manufacturing Co. (TSMC), Google, and Qualcomm. As a result, Huawei is unable to continue working on its HiSilicon chipsets, use Google Play Services on its Android phones, and use Qualcomm processors or 5G chips on its smartphones.

The rear panel of the Huawei P50.
The Huawei P50 was among the few smartphones Huawei launched in 2021. Image used with permission by copyright holder

This move from Huawei could be a last-ditch attempt to salvage its smartphone business, which has been decimated by the sanctions. The two-year period saw Huawei drop from the list of the top smartphone brands in the world while its consumer business has seen dwindling sales for several straight quarters.

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According to people familiar with the matter, the move is a result of the success Huawei saw with the sale of its sub-brand Honor in 2020. Soon after the sale, Honor was able to re-stablish ties with suppliers like Qualcomm and Google. As a result, it is now gradually making its way up the ranks and continues to launch new handsets at regular intervals.

If negotiations with these partners succeed, Huawei aims to sell as many as 30 million smartphones in 2022, the report adds.

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Rahul Srinivas
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