Most of us know about the raging China-US trade war and how its been impacting on the tech industry. Sadly, Huawei is still stuck in the middle of its and has faced extremely damaging circumstances thanks to the US. This doesn’t mean that Huawei was not ready for it. It has been revealed that the company was aware of possible hostile action from the US and was taking countermeasures to sustain the big hit when it came. And sure enough, Huawei is able to sustain the big hit now that it has arrived. The company may not get out of it without any damage, but it surely will be able to stay afloat.
According to the latest report, one of Huawei’s countermeasures included buying large stocks of chips. Yes, Huawei was intentionally buying more semiconductors from American companies than it actually needed. This action was taken by the company to give it some breathing space when the US companies inevitably strike down. Surely enough, Huawei has gotten enough headroom for a year to sort things out before its reserves will run out. Yes, Huawei has a year’s worth of chips stored in its warehouses already.
According to the report, Huawei revealed its intentions to its global suppliers six months before the US embargo was imposed. Huawei asked them to stockpile crucial components for a year to stay safe from the trade war uncertainties. Huawei is also reportedly finding other options who won’t be affected by Trump’s ridiculous embargos. Another effort Huawei made was to start manufacturing its own parts and components to become more self-reliant than ever. This would allow Huawei to stand strong even in the worst trading conditions.
Huawei’s Plans to Sustain Damages
Huawei’s plans extend to more than just chips and ICs. According to the report, Huawei is going beyond the chips and getting ready to manufacture passive components and optical parts instead of just focusing on the key components. Components that are much harder to export at this point have been stockpiled a year’s worth of supply. Other components that aren’t that crucial are stockpiled to 3 months’ worth of supply.
Analysts are saying that the result of losing Huawei from the American chip market will become almost impossible to predict. This is because nothing is set in stone right now and anything could happen. China and the US could come to an agreement and Huawei could continue as it usually did. Huawei could establish its own industrial sector and manufacture parts on its own. The company could also get in contract with non-American companies which may not ally with the US and shutting down business with Huawei. Due to so many possibilities and so many variables involved, it is hard to predict how things will unfold.
The real concern for Huawei is to sustain itself before its stockpiles run out of stock. These stockpiles are the last head start that Huawei has right now. If the company can’t find a solution to the ban before the stocks run out, things could get pretty ugly for Huawei.