Huawei is preparing for a war against the USA. It has built up reserves of key chips that should be enough for two years

The company Huawei is continuously suffering from the effects of the trade war between the USA and China. The latest information, however, evaluates reserves of key chips manufactured in the USA. According to available leaks, the stockpiles created by this Chinese manufacturer could last as long as two years.

Huawei: Stockpiles of key chips

The source that brought the information about the prepared reserves says that the Chinese giant Huawei did so in order to protect its presence and its operations from sanctions by the USA.

These sources also revealed that the sufficient reserves were primarily intended for Intel processors and programmable chipsets from Xilinx. These processors and chipsets are evidently the most important components that Huawei also uses for its core stations and cloud services.

After all, the Chinese giant is a major player in the network infrastructure of upcoming 5G networks and is also developing various cloud services similar to Amazon.

USA sanctions

Recent sanctions imposed by the US government cut off the delivery of chips specifically for Huawei. However, it seems the company had already prepared in advance. Currently, it has reserves that should last for a period ranging from 1.5 to 2 years. Analysts, though, claim that relying on accumulated chips could become a competitive bottleneck.

The company’s financial results recently revealed that last year it invested 167.7 billion Chinese yuan ($23.45 billion) in inventories of chips, components, and other parts in 2019. That is a significant jump of as much as 73 percent compared to 2018.

As mentioned earlier, the large Chinese manufacturer focused primarily on building reserves for the programmable chips of Xilinx, and not by chance. Now, a problem is also emerging in the production of its own processors under the HiSilicon brand, which the company is trying to solve by relocating any part of the manufacturing process outside the USA.

In the same period, the company also increased its inventories of memory components such as NAND and DRAM from Samsung, SK Hynix, Micron, and Kioxia. It looks like the Chinese manufacturer is gearing up for a showdown with the measures of the government USA. Time will tell whether the new US measures will also affect the operations of Chinese OEM manufacturers.