How China is helping Huawei make advanced chips to take on the US – Times of India

In late 2020, the Trump administration imposed sanctions on Huawei, cutting off its access to global semiconductor supply chains and leaving the company fighting for survival. Cut to three years later, in September of 2023, the Chinese phone maker took everyone by surprise, especially the US, as it made an advanced 7nm chipset – the HiSilicon Kirin 9000S – powering its latest phone – the Mate 60 Pro – defying US sanctions.
Before the sanctions, Huawei bet $67 billion on a deal with SMIC, a state-supported foundry trying to catch up with the leading chipmakers. SMIC found a way to produce advanced chips using outdated equipment. Huawei contacted SMIC to create a new smartphone “system on a chip” called Charlotte. However, in December 2020, SMIC was put on the US sanctions list. To build Charlotte, SMIC had to deal with an unfamiliar, advanced process and new restrictions on acquiring and managing equipment.
The codename “Charlotte,” for the Kirin 9000S symbolises Huawei’s desire to reclaim its place in the global supply chain, an employee told the Financial Times.
Huawei’s new chip has ‘puzzled’ the US
Then, in 2023, Huawei came out with its new chip – Kirin 9000S – which was produced in China by Semiconductor Manufacturing International Corporation and the first one from the Chinese chipmaker to have been built on a 7nm node, its most advanced yet. Despite all the sanctions obstacles, Kirin 9000S is said to perform comparably to a year or two old Qualcomm chips based on various tests.
It was a ‘bolt from the blue’ for the US administration. In the US, there was confusion about how Huawei produced chips despite sanctions. Jake Sullivan, US national security adviser, called for more information about the Kirin 9000S.
Well, it has been no one but the Chinese state that has been supporting Huawei to build a “self-sufficient chip network.”
The ‘covalent’ bond between Huawei and SMIC
Huawei was SMIC’s first customer for its upgraded 7nm production lines and played a crucial role in redefining several aspects of the production line. The chipmaker did not have a team capable of manufacturing such a design. So, it hired experts from Taiwan, Japan, South Korea, and Germany to improve productivity. A source told Bloomberg that Huawei also hired former employees from the Dutch lithography specialist ASML.
Despite a risky bet, the Mate 60 Pro, which the Kirin 9000S power, raked in big money for the Chinese phone maker and went on to pose a big challenge for Apple, as it outdone its newest iPhone 15 series in China.
Jeff Pu, an analyst at Haitong International Securities, has estimated that up to 70 million smartphones using Kirin-based chips could be produced by the end of 2024.
But Huawei’s ambitions are not limited to just smaller chips. The two Chinese companies – Huawei and SMIC – are looking to make high-performance chips for AI systems as the US government tightens restrictions on chip sales to China. However, the manufacturing process for data centre chips is challenging, with yield rates for Ascend 910B chips currently only just over 20%. SMIC is working to expand production capacity for pre-order Huawei chips but faces restrictions from the US, Japan, and the Netherlands.
Despite US sanctions, SMIC kept its 7nm production line going by sourcing equipment from existing plants and those received before the restrictions. SMIC received advanced DUVs from ASML before the US tightened export controls, allowing for increased production. Meanwhile, ASML says it is complying with export control rules and will not receive export licences for shipment to Chinese customers after 2024.
Industry insiders stated that some equipment may have been obtained in violation of the export controls. US officials were surprised by SMIC’s ability to acquire spare parts and technical services. Applied Materials, a US semiconductor equipment manufacturer, is being investigated for potential export restriction violations.
Sources tell that SMIC may run out of equipment maintenance and material supplies before manufacturing advanced chips.
However, Huawei is said to be developing a network that would provide them access to enterprises, including three subsidiaries under a firm called SiCarrier, as reported by Bloomberg. These firms are said to be crucial in the development of lithography machines, particularly the high-end extreme ultraviolet variety, which are covered under sanctions from the US, Japan, and the Netherlands.
According to a Bloomberg investigation, a Shenzhen government investment fund has been helping Huawei build “a self-sufficient chip network” since 2019. Then, the Chinese government Huawei and SMIC are receiving state support to keep pace with the industry. China’s microchip industry has been nurtured by a state-funded investment fund since 2014. The government’s current objective is to establish cutting-edge chip production lines “at all costs.”

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