Huawei is big on US chip reserves

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FILE PHOTO: The U.S. flag and a smartphone with the Huawei and 5G network logo are seen on a PC motherboard in this illustration taken January 29, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

In what the latest round of news is suggesting, Huawei Technologies has actually built up its reserves for important US made chip – which are likely to last the company for the next two years. Sources say that such a decision was taken by the Chinese company so as to protect itself from US sanctions.

It is said that ample reserves were created for server grade processors that have been made by both Intel and Xilinx for the sake of programmable chipsets. These processors are said to use the ‘most essential components’ that Huawei makes use of for its base stations as well as its emerging cloud business. If you aren’t already familiar – Huawei happens to be amongst the big players in the world of 5G networking infrastructure and equipment while the company is also looking forward to the idea of introducing cloud based services that would be similar to Amazon.

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The latest sanctions put forward by the US government mean that Huawei’s chip supply has been cut off and by the looks of it, Huawei has actually already prepared well in advance. Indeed the company, in its inventory, has components that will last for 1.5 to two years. But at the same time, experts have also been quick to warn that this dependence on stockpiling might not be the greatest of ideas in hindsight as it could end up hindering the company’s competitiveness.

Huawei had recently made it clear that it spent a massive amount of money – $23.4 billion in stockpiling chipsets, components, and more last year – this representing a 73 percent increase from 2018. Primarily though, it seems as if the Chinese manufacturer has actually placed its basis on the building of reserves for programmable chips from Xilinx due to the fact that it’s not very easy to replace the processor at the current period in time.

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