How Huawei stacks up against Apple in tech self-sufficiency

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Huawei Technologies on Friday offered the first glimpse
of an in-house software that may someday replace Google’s Android, an important
step toward reducing its reliance on American technology.

“HarmonyOS,” previously code-named “Hongmeng,” is a
long-gestating operating system that could soon find its way into smart TVs and
lower-end phones. The OS embodies Huawei’s shift toward self-reliance as
American sanctions cut it off from vital technology, and escalating
US-Chinese tariffs jeopardise a carefully orchestrated global supply chain.

Huawei’s efforts actually mirror Apple’s: to develop vertically-integrated
supply and production lines that help reduce exposure to inclement market
forces, unreliable suppliers and unpredictable events like international trade
disputes.

 

The newly hostile environment is putting to the test not
just Apple’s “Designed in California, Assembled in China” slogan, but the
overall preparedness of two smartphone-making giants as the decades-old
made-in-China model fractures. Here’s a look at how dependent Apple and Huawei
are on external suppliers.

  • OS: Apple’s strength has always been the integration of
    software with hardware, and it has absolute control over iOS. Huawei is trying
    to do the same with HarmonyOS, but it has everything left to prove, starting
    today. For the foreseeable future, Huawei remains dependent on Android for its
    mainstream smartphones, especially outside China. Advantage: Apple.
  • Software ecosystem: The enormous fortress of iTunes, the App
    Store and a dedicated following of enthusiastic app developers is a huge and
    profitable edge for Apple’s mobile business. Huawei will need developers to
    build valuable apps for its ecosystem, which is another major question mark.
    Advantage: Apple.
  • Processors: Both design their own processors but neither
    controls their actual production. Instead, they rely on Taiwan Semiconductor
    Manufacturing to put them together and on the SoftBank Group’s Arm for
    the licenses they need to design semiconductors. Advantage: Neither.
  • Memory and storage: SK Hynix, Samsung Electronics and Micron Technology anchor the two smartphone makers’ storage needs. The
    Korean duo have a significant lead on RAM modules. Neither Apple nor Huawei has
    the capability to produce their own storage chips, though Huawei recently
    launched the Nano Memory Card. Advantage: Neither.
  • Display: Samsung is the biggest supplier of the organic
    light-emitting diode displays that Apple uses for its iPhone X and XS top-tier
    devices. Others such as Japan Display and LG Display provide
    liquid-crystal display panels for the likes of the iPhone XR and earlier
    models. While Huawei is in much the same boat, it’s increasingly relying on
    home-team vendor BOE Technology Group for its OLED panels, which are
    starting to win customers beyond China. In short, neither is capable of doing
    the manufacturing itself. Advantage: Neither.
  • Modems: Essential to mobile connectivity, modems are only
    going to become more important with the transition to next-generation 5G
    technology. Apple recently agreed to buy Intel’s modem division, a step toward
    designing its own 5G chips. But Huawei is already among the leaders on this
    front, having announced the Balong 5G01 modem in February. As with processors,
    neither has its own silicon facilities so they’ll again be reliant on
    specialist foundries. Advantage: Huawei.
  • Assembly: Apple and Huawei are heavily reliant on assemblers
    such as Hon Hai Precision Industry, also known as Foxconn. Both also tap
    other Taiwanese contract manufacturers – such as Pegatron, Compal
    Electronics and Quanta Computer Inc. – to varying degrees, while Huawei
    also relies on Flex Ltd. But unlike Apple, which decided years to outsource
    much of its global production in China, Huawei operates a few highly automated
    lines to make top-tier P series phones. Advantage: Huawei.
  • Others: Apple and Huawei rely on a plethora of companies
    elsewhere in their smartphone production. US companies Skyworks and Qorvo
    provide radio-frequency modules to facilitate 3G and LTE communications. Dutch
    semiconductor company NXP is the go-to supplier of NFC parts required for
    contactless payments. Sony is the undisputed leader in camera sensors and
    modules. And Apple-funded Corning supplies toughened glass. Advantage:
    Neither.
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Apple and Huawei appear to be the brains orchestrating a
huge, international body of engineering muscle. They design their own software,
processors, modems and phones, but ultimately have to hand those plans off to a
legion of transnational suppliers and manufacturers.




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