Rumors are afoot in technology markets that Huawei’s x86 server business has collapsed after Intel’s license to supply the Chinese company with chips to power their servers expired.

Huawei will sell off its x86 server operations, which will first be taken over by Suzhou’s State-owned Assets Supervision and Administration Commission of the State Council, the provincial branch of the central government council that manages China’s state-owned enterprises, according to a Liberty Times report

Based on a company financial report, Huawei's x86 server revenue fell last year to about US$3.9 billion (NT$108.49 billion) and will lose tens of billions overall after selling off the assets.

According to research firm IDC, Intel held 95% of the global market for chips used in database servers, with 99% of the market for x86 servers. Before 2019, Huawei’s servers were based upon Intel’s chips.

Yet the U.S. government restricted Huawei’s purchase of Intel’s chips in May 2019, which hit Huawei’s server business hard, with revenue sliding to US$1.49 billion in the fourth quarter of that year, a year-on-year decline of 18%. The U.S. followed up by upgrading restrictions on Huawei first in May and then in Aug. 2020.

Foundries like Taiwan Semiconductor Manufacturing Corp., China’s Semiconductor Manufacturing International Corporation, and others, could no longer supply Huawei. All chips involved in the design or manufacturing of the U.S. products had to be licensed by Washington.

Then in September of last year, Intel and AMD announced they had obtained permission to supply to Huawei. However, by that stage, Huawei’s x86 server revenue had plummeted by nearly 30% from its 2018 peak of US$5.57 billion to just US$3.93 billion.

The report said that Huawei has now decided to let its x86 servers go. According to sources on the inside cited by Liberty Times, Intel’s supply of chips relapsed in May this year, as the U.S. company's license to sell to Huawei had expired.

Neither Intel nor Huawei made a public statement on the matter.

By: DocMemory
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