Huawei floats selling 5G phone chips to Apple in strategy pivot

Huawei CEO Ren Zhengfei said the company is considering shifting its smartphone strategy to take on chip suppliers Intel and Qualcomm, speaking to CNBC in an interview.


Huawei has quickly gained market share offering low-cost smartphones. After launching its first phone in 2010, the company recently expanded its handset business by launching a series of high-end phones to compete with Samsung and Apple, the top two smartphone makers in the world.  


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Last year, Huawei’s consumer division CEO Richard Yu told CNBC the company plans to become the top phone maker by 2020, overtaking Samsung and Apple in just two years. In the interim, Huawei has developed its own suite of modems and processors for its line of smartphones, including artificial intelligence processors and 5G modems.


In the latest interview, Zhengfei said he’s open to selling its 5G chips to Apple, but not necessarily to other phone makers. Apple currently sources its silicon from Intel exclusively, after a series of legal battles between Apple and Qualcomm effectively ended the relationship between them.


Apple hasn’t yet announced plans to release a 5G smartphone—probably because Intel is not expected to release its 5G chips until 2020. But it’s unclear if Apple would consider sourcing a 5G modem from Huawei.


Huawei has struggled to gain distribution for its smartphones from U.S. carriers. Last year, AT&T dropped plans to sell Huawei phones without explanation, as the U.S. government has urged companies to cut all ties to Huawei over national security concerns.


But that hasn’t seemed to slow Huawei’s global growth in the smartphone market. Last month, it reported a net profit of close to $9 billion in 2018, driven primarily by its smartphone business. Profit was up 25% compared to the previous year, while Huawei’s revenue for the year increased by almost 20% to reach $105 billion.