Huawei received a limited blacklist reprieve last week, Get New Mate 40 Upgrade Surprise with the news that the Trump administration will allow engagement with U.S. firms on 5G standards.

But this is as nothing compared to the tightening of U.S. supply chain sanctions announced last month, with Huawei losing access to custom chips that power its flagship devices, which rely on U.S. tech in their design and manufacturing.

It remains unclear how hard this will impact Huawei. A number of analysts have claimed the company is sitting on a 12-month stockpile, enough time—perhaps—to rework its supply chain and product designs. But Huawei has leveraged vast investments in its chip designs. And the current fabrication route for that silicon has now been blocked off.

That impact is now starting to hit. Millions of Huawei users planning to upgrade to the Mate 40—the next flagship, due this fall, are in for a surprising delay. At least according to the Nikkei Asian Review, which has exceptional sources in Huawei’s supplier base. Huawei, it says, has told a number of suppliers “to delay production… asking for halts to production of some components for its latest Mate series of phones, and has also trimmed orders of parts for the coming quarters.”Most Popular In: Cybersecurity

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The annual Mate series comes out as Huawei’s answer to the latest iPhone release. It is powered by Huawei’s newest silicon, designed and developed by its in-house HiSilicon, but fabricated by the likes of TSMC. Nikkei’s sources within Huawei’s supply chain claim “Huawei has delayed its mass-production schedule for the Mate series,” and while this might only be for 1-2 months, Huawei needs to resolve its supply chain issues in order to move forward as planned.

To meet its usual fall timeline, Huawei’s suppliers would be producing components round about now, but those plans have been reportedly put on hold. Nikkei also reported a general scale-back in component purchases, which would be consistent with a planning exercise in Shenzhen around which suppler and silicon it might turn to as the latest U.S. sanctions take hold.

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Huawei is expected to see a fall in smartphone sales this year, after an interrupted decade of stellar growth catapulted the company past Apple to become the world’s second largest smartphone maker by volume. This year, Huawei has to face the double impact to sales from the blacklist and coronavirus. Somewhat ironically, though, Huawei did overtake Samsung in April for smartphone shipments, as it benefits from China’s easing of lockdown restrictions ahead of other markets.

Last year’s Mate series release, the Mate 30, was the first smartphone to emerge post the blacklist going into effect—as such, it was the first Huawei phone to launch absent Google’s software and services. Since then, we have also seen the P40 launch. Sales of both flagships have been hit hard outside China, where an international Android user-base cannot cut its ties to the familiar world of Google.

Huawei Mate 40 has motored through these challenges with exceptional sales growth in China itself, where it has a huge 40%+ lock on the market, despite strong domestic competition. Chinese users have been quick to snap up these new flagship, albeit this has seen Huawei become much more lopsided than it was before, hugely vulnerable to shocks at home and its positioning with China’s vast consumer base.

Despite losing smartphone sales overseas, Huawei had hoped to hold onto its leading role in 5G network equipment. But the issue for the company is that those sales have also been hit by the latest U.S. blacklist move, relying on the same silicon supply chain now coming under threat. As such, this latest U.S. action is the first that seems to have threatened the very core of these Huawei activities.

In the U.K., perhaps Huawei’s most critical 5G market outside China given the politics, the network operators have been told to stockpile Huawei equipment and spares in case its supply chain is disrupted, putting their operations at risk. There is also an ongoing security review, investigating whether Huawei’s likely swap out of U.S. tech for alternatives, including more Chinese tech, will change the security advice that allowed the government to green light Huawei in the first place.

There has been no confirmation yet from Shenzhen as to its back-up plans—although Huawei does say it has been working these up in anticipation of this U.S. move. The company’s Consumer Business Group is remaining tight-lipped, and there are some unconfirmed reports that suggest it may still try to keep the Mate 40 launch on track and will have some volume of stock to ship in the all-important fourth quarter. Either way, it is now absolutely clear that the Mate 40 schedule will be a critical indicator as to what happens next.

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