In the months before the Trump administration banned US tech sales to Huawei, the Chinese company furiously stockpiled US semiconductors and other parts it needed to keep producing telecom network equipment and smartphones.
Some of those supplies are now running low, analysts say, pushing Huawei closer to a make-or-break point that will show whether China's most powerful company can maintain its dominance of the global market for network gear and phones.
Huawei's fate is central to the US-China trade war, making the next few months a possible turning point in whether the countries can reach a truce.
The Trump administration has labeled Huawei a security threat, saying the Chinese government could tap into Huawei equipment installed overseas to spy on the West or disrupt infrastructure - allegations Huawei denies. But President Donald Trump has also suggested the United States could ease up on the company as part of a larger trade deal. Beijing sees Huawei as an important symbol of China's economic might, and it is loath to consider a trade settlement that doesn't free Huawei from the sales ban.
In the meantime, some industry watchers believe Huawei will soon run out of vital parts it needs to build 5G wireless equipment, which underpins the super-fast internet and telecom networks many countries are building.
Of particular importance is technology from Xilinx, of San Jose, California, which allows 5G base stations to be re-programmed from afar.
Joe Madden, principal analyst at the research firm Mobile Experts in Campbell, California, closely tracked shipments to Huawei as the Chinese company was stockpiling parts. Madden estimates that Huawei bought enough of Xilinx's integrated circuits, known as field-programmable gate arrays, or FPGAs, to last it until next month.
"I'm still forecasting them to run out of Xilinx FPGAs in November and to change over to their own parts," Madden said. That shift could make Huawei's 5G equipment less attractive for buyers around the world because Huawei's technology isn't likely to be as advanced as Xilinx's, Madden said.
With the Xilinx FPGAs, "you can put a 5G network in the field and still change the software after you put it on the tower," he said. Telecom companies value that flexibility with 5G because the technology is new and will probably require frequent adjustments over time, he said. Huawei's technology isn't likely to be "field programmable" in this way, he said.
"If the Xilinx chip needs to be changed out, they will be in trouble," he said.
Huawei has consistently defended its ability to keep growing despite the ban. "At the beginning of this crisis, no one believed we would make it. However, we survived," chief executive Ren Zhengfei said during an event at Huawei headquarters in Shenzhen last month.
"We aren't relying only on our previous inventory to support current production," Ren said, adding: "The results from the latter half of this year will prove that we can do well because we have real strength."
In May, immediately after the Trump administration banned the sale of US technology to Huawei, most Western companies halted all sales to the Chinese company. Some have since resumed certain sales that they say don't violate the prohibition. The ban applies to technology made in the United States, and to products made overseas that derive more than 25 percent of their value from US-origin technology.
The sales resumption has eased some of the pressure on Huawei. Companies that have confirmed they've restarted some sales include Skyworks Solutions of Woburn, Massachusetts, Qorvo of Greensboro, North Carolina, Micron Technology of Boise, Idaho, and ARM, a British semiconductor-design company that conducts some of its research and development in the US.
But Huawei is still cut off from some important components. In August, a top Xilinx executive said the company has resumed shipping some older products to Huawei, but nothing 5G-related.
"We don't think we will be selling 5G-based products into Huawei until the government changes its position," CFO Lorenzo Flores said during a presentation at an investor conference.
"We know they do depend on our products in many applications, and engineering around that would be difficult," Flores added. A Xilinx spokeswoman declined to comment further.
The Trump administration has granted two 90-day reprieves that have allowed some US sales to Huawei to continue, but those have applied to a limited range of technology, industry executives say. The current reprieve expires October 19.
Huawei says it is racing to re-engineer its products to avoid US chips and software. In an effort to protect its smartphone and device sales from the possible long-term loss of Google's Android operating software, Huawei in August unveiled its own operating system, HarmonyOS. Huawei said it would first launch the software in the Chinese market and later expand it internationally.
Analysts have said a Huawei operating system would have a tough time competing globally with Google and its popular Gmail and Chrome apps. In June, Ren said the US blockade was causing a large drop in Huawei's smartphone sales outside China.
Even if Huawei loses smartphone sales in the West, the company's dominant position in China will bolster its financial position, said Dave Burstein, a telecom analyst at STL Partners and publisher of Huawei Report. Burstein discloses two conflicts of interest on his site, saying Huawei has paid his expenses to attend conferences and provided contracting work to STL Partners.
Burstein estimates that Chinese consumers will buy up to 200 million 5G phones next year, constituting more than half of such phone sales worldwide. Huawei will account for about 40 percent of those sales in China, he said.
Likewise, Chinese telecom companies will buy a large portion of all 5G network equipment sold worldwide in the coming years, Burstein said, with Huawei and Chinese rival ZTE accounting for most of those sales.
© The Washington Post 2019