The mid-tier smartphone Huawei is testing could help it circumvent US trade restrictions

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Huawei is testing a smartphone powered by an in-house operating system (OS) that could be released before the end of the year, according to Chinese state-owned media outlet Global Times, via Reuters.

The report claims the smartphone would be aimed at the mid-tier device market and would cost around 2,000 yuan ($288). Launching HongMeng OS on a mid-tier rather than flagship device suggests Huawei would likely take a cautious approach to any move away from Google's Android.

Here's what it means: Creating a commercially viable OS would be a key step for Huawei toward establishing wholly China-based operations.

The company has been seeking ways to disentangle its supply chains from the US amid recent scrutiny and trade restrictions. Its chipmaking subsidiary, for instance, has been offering the parent company reassurances of its capability to meet all of Huawei's needs.

Shifting OSs, though, is a much bigger change that wouldn't just impact Huawei behind the scenes, but also its users. The HongMeng OS will reportedly be able to run applications made for Android, though it seems it will be based on a different kernel than Google's OS.

Huawei CEO Ren Zhengfei said the OS was likely to be faster than Google's on Huawei phones, and talked about how it could help the company minimize its dependence on the US-based search and mobile giant. But later reports downplayed the significance of HongMeng OS, characterizing it as intended for industrial devices rather than smartphones.

The bigger picture: Huawei could be in position — more so than past entrants to the smartphone OS space — to topple the iOS/Android duopoly, at least in China.

Ever since Windows Phone ceased to be a viable option on the market, Android and iOS have been the only significant options for consumers. But Huawei likely has the sales base in China to support the transition to another OS. And given its target Chinese market's long history with extensive Android skinning and customization, users might not consider a new OS as big of a change as they would in other markets.

A homegrown OS could also give Huawei an advantage over its Chinese competitors, if trade restrictions ultimately mandate that other phone makers shift away from Android. But if companies like Oppo, Xiaomi, and Vivo are allowed to keep using Android, that edge would disappear.

Debuting HongMeng OS via a mid-tier smartphone is a smart strategic move on Huawei's part, as it allows for a low-risk trial run of the OS before moving to a flagship device. Consumers buying top-end devices like Huawei's P and Mate series are looking for seamless experiences, and they probably wouldn't be happy to see an unfamiliar and potentially buggy first-generation OS on their phones, despite the market's likely openness to OS change.

Huawei will make a splash in the media and tech spaces with the introduction of HongMeng OS, but doing so on a midtier device means the OS's performance — both technical and financial — won't make or break Huawei's wider business. This cautious and measured approach makes HongMeng OS a low-risk play with massive potential upside.