Huawei Chip Unit Orders up more Domestic Production as U.S. Restrictions Loom
Huawei Technologies Co Ltd is gradually shifting production of chip designed in-house away from Taiwan Semiconductor Manufacturing Co Ltd (TSMC) and towards a mainland Chinese firm in preparation for more U.S. restrictions, sources familiar with the matter said to Reuters.
The move towards Shanghai-based Semiconductor Manufacturing International Corp (SMIC) comes as Washington readies new rules which would require foreign companies using U.S. chipmaking equipment to obtain a license before supplying chips to Huawei - rules that would directly affect TSMC.
It also highlights how U.S. restrictions against Huawei can act as an impetus for Chinese companies to accelerate the development of homegrown technology.
The U.S. government alleges Huawei, the world’s biggest maker of telecom network equipment and a major smartphone manufacturer, is a national security risk as its equipment could be used by Beijing to spy, and has barred U.S. firms from selling to the Chinese firm without a licence. Huawei has repeatedly denied its products pose a security threat.
Huawei’s chip unit, HiSilicon, began to direct some of its engineers towards designing for SMIC rather than TSMC in late 2019, said one of the sources, who was not authorised to speak to the media and declined to be identified.
“Before, Huawei wanted to work with top notch manufacturers, and SMIC was just second-tier,” the person said. “We are now moving resources to SMIC to speed up our help to them.”
A Huawei spokesman called the shift “common industry practice” in a statement to Reuters. “Huawei considers carefully issues such as capacity, technology and delivery when choosing semiconductor fabrication plants,” it said.
TSMC, the world’s top contract manufacturer of semiconductors, said it does not comment on individual customers. SMIC declined to comment.
It was not immediately clear how much more production is being outsourced to SMIC. Huawei has also said it would look at South Korean firms, other Taiwanese and mainland Chinese firms as alternative sources for chips.
Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.