Huawei Technologies, the Chinese tech giant, is planning a significant comeback in the 5G smartphone industry. This move comes after a U.S. ban on equipment sales severely impacted its consumer electronics business. The company is expected to procure 5G chips domestically, leveraging its advancements in semiconductor design tools and chipmaking from Semiconductor Manufacturing International Co (SMIC).

Huawei's consumer business revenue peaked at 483 billion yuan ($67 billion) in 2020, before plummeting by almost 50% a year later due to the U.S. sanctions. The Shenzhen-based tech giant once competed with Apple and Samsung to be the world's biggest handset maker until rounds of U.S. restrictions beginning in 2019 cut its access to essential chipmaking tools for producing its most advanced models. The U.S. and European governments have labeled Huawei a security risk, a charge the company denies. Since then, Huawei has only sold limited batches of 5G models using stockpiled chips.

Huawei is expected to procure 5G chips domestically using its own advances in semiconductor design tools along with chipmaking from SMIC. This strategy is based on information from three third-party technology research firms covering China's smartphone sector. The firms, citing industry sources including Huawei suppliers, spoke on condition of anonymity because of confidentiality agreements with clients. Huawei declined to comment, and SMIC did not respond to a request for comment.

A return to the 5G phone market would mark a victory for the company that for almost three years said it was in "survival" mode. The research firms predict that Huawei could produce 5G versions of flagship models like the iPhone rival P60 this year, with new launches likely in early 2024. However, U.S. restrictions cut Huawei off from Google's Android operating system and the bundle of developer services upon which most Android apps are based, limiting Huawei handsets' appeal outside of China.

Globally, Huawei shipped 240.6 million smartphones worldwide in its peak year of 2019. Unfortunately, after topping the global smartphone industry, the Chinese tech giant began its descent as its smartphone business started feeling the brunt of the US sanctions that continued to stifle its growth, cutting off the company's ability to obtain critical components for its devices. By the first quarter of this year, Huawei stands as only the sixth-largest smartphone brand globally, with a mere 16% market share.

Despite the global challenges, Huawei has managed to maintain a strong presence in the domestic market. Huawei has even achieved growth in China's smartphone shipment for the Q1 of 2023. Of course, Huawei continued to launch devices from smartphones to smartwatches. Still, the company has struggled to sell those devices outside of China as it cannot use Android, a commonly used operating system globally. Huawei eventually launched its operating system, HarmonyOS, installed on 330 million devices at the end of 2022, up 113% year-on-year. That operating system, unfortunately, failed to gain traction outside of China.

In conclusion, Huawei's planned return to the 5G smartphone market is a testament to the company's resilience and innovation. Despite facing significant challenges due to the U.S. ban, the company is leveraging domestic resources to make a comeback. However, the road ahead is not without challenges, and it remains to be seen how successful Huawei will be in regaining its lost market share. The company's journey will be closely watched by industry observers and could potentially reshape the global smartphone market dynamics.