(Yicai Global) Nov. 13 -- Qualcomm has secured the necessary US government license to sell fourth-generation chips to Huawei Technologies, according to an executive at one of the Chinese telecom giant’s upstream suppliers.

California-based Qualcomm acquired the 4G sales permit a few days ago, but a license to sell fifth-generation chips was still not available, said the executive, whose company’s main business is original design manufacturing. The listed firm works closely with Qualcomm and Huawei, both of which offered no comment on the development.

Judging by current conditions, it is possible that more companies will be able to get licenses from the United States to resume supplies to Huawei, Jia Mo, an analyst at technology market research firm Canalys, told Yicai Global.

Huawei has not abandoned its partnership with large channels while slowing its shipments, Jia said. The company is expected to stabilize its market share and may develop a more aggressive strategy to regain the market after its supply chain becomes stable.

But a Huawei insider told Yicai Global that the Shenzhen-based company will “struggle to remain alive,” as 5G handsets will be the mainstream market next year.

With the 4G license, Qualcomm is expected to enhance Huawei’s supply capacity in 4G phones. With its patent advantage, Qualcomm, one of Huawei’s main chip suppliers, which earns most of its revenue from the two business segments of Qualcomm CDMA Technologies and Qualcomm Technology Licensing, has been collecting royalties from handset makers.

Royalty Payments

Huawei stopped paying royalties to Qualcomm from April 2017 as its own patent accumulation grew rapidly. This impacted the pair’s cooperation, with the proportion of Qualcomm’s processors in Huawei handsets falling from 40 percent to single digits at one point.

But on Nov. 4, Qualcomm said in its fourth-quarter earnings report that it had received USD1.8 billion in royalties from Huawei. Qualcomm Vice President Cristiano Amon said at the results meeting that Huawei had created an opportunity to expand the potential market for QCT. And getting the license to sell to Huawei would be a completely positive opportunity.

Nearly 10 vendors, including TSMC, MediaTek, Western Digital, Semiconductor Manufacturing International, Macronix, SK Hynix and Samsung, had applied to the US government for licenses to continue their supplies to Huawei. Various chip vendors, including Intel, Advanced Micro Devices and Skyworks, had got the permits for Huawei supply.

On Nov. 4, Skyworks said at its 2020 fourth-quarter earnings meeting that it had obtained limited permission to ship some of its products to Huawei and was in communication with the Chinese company to clarify its needs. Huawei was Skyworks’ second-largest customer, with a major focus on radio frequency technology.

Editors: Liao Shumin, Peter Thomas