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Qualcomm gets waiver to sell Huawei chips for 4G product? Why does it matter?

by David Kerr | Nov 16, 2020


Multiple sources have reported and Qualcomm confirmed today  that is has been granted a waiver to offer chips for "some 4G products" in a potential easing of discriminatory treatment of  one of the worlds largest CE manufacturers. 

Does it matter and why? Some will argue that 4G is old news, that it doesn't matter anymore and that any reprieve for Huawei is likely to have minimal impact because 5G is the driver of the global market now.

Well not quite so fast. In 2020, our Emerging Device Technologies service counted 4G as retaining 75% of global smartphone sales https://tinyurl.com/y6amqjw5. For 2021,  while 4G LTE share of the total falls as 5G takes off in China, US, Korea, Japan and a few European countries,4G sales globally will still be above 600m units. Not a market to be ignored!

Looking at the demand for smartphones by region provides an important clue as to why Huawei, their suppliers and suppliers to the global 4G market should care. The share or penetration of total smartphone sales varies significantly by region as seen below:

SA4G2021
Many of the world's growth markets will continue to be strongholds for 4G and  a strong minority of countries still have active 2G networks that have not yet made the leap. As  a leader in 4G, Huawei has a strong vested interest in migrating operators along the 2G to 4G journey offering operators dramatic cost, capacity and capability advances and a huge range of cheap, feature rich smartphones and feature phones readily available from many vendors. This of course includes Huawei itself and its Honor brand which are hugely popular in many markets around the world despite the attempted brand assassination by US officials.

For many countries around the world, 4G will be larger than 5G in terms of subscribers   or users for the next few years. Indeed many operators will still not upgrade to 5G over the 2021-2024 time period. 4G networks in many countries have not yet returned the expected yield on investment and there is very limited consumer pull/demand for new 5G use cases. Indeed, for 2021 there are really no or few use cases which require 5G as advanced 4G LTE networks can deliver all the performance required by the vast majority of consumers or indeed businesses. Granted the next releases of 5G will truly enable some unique capabilities but largely we are at the embryonic phase of need identification and value proposition alignment for the most part.

Returning to 4G devices, there will be 1.2B LTE devices sold globally in 2021-2022 alone. Leading demand sources for 4G LTE devices include China, India, Brazil, Indonesia, Russia to name just a few. Check out our predictions for 88 countries of smartphone sales for 4G and 5G here. https://tinyurl.com/y6amqjw5

4G is not dead and maybe just maybe if Huawei can get a reprieve which allows it to continue to sell significant volumes of smartphones outside of China, it can buy enough time for global geopolitics to settle back down and a return to business as usual. Ok, its a longshot say 20% probability. Can you afford to ignore that possibility if you have benefited from Huawei's decline (Xiaomi, Oppo, Vivo, Samsung).? With cumulative 4G sales topping 2B units in our forecast horizon, it is still a huge market for display manufacturers, sensor vendors, battery suppliers, bluetooth/wifi module players, biometrics suppliers. For operators not yet ready to take a leap of faith and economics to 5G, how would a reborn Huawei and Honor portfolio benefit your ability to appeal to a broad range of customers.

What would it do to the expected supply chain mix if Huawei is not dead in the water in smartphones?

Client to Strategy Analytics Emerging Device Technologies service can schedule a briefing with our lead analysts. 

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