Huawei Purportedly Has a Plan to Get Around U.S. Sanctions: Build Its Own Chips

© Photo: Kevin Frayer (Getty Images) Huawei reportedly has an idea to try to get around U.S. sanctions.

Huawei has apparently lost all hope, or patience, that it will ever free itself from U.S. sanctions, which have effectively choked off its access to much-needed chips. The company is purportedly getting ready to do something about it. The solution: build its own chip plant.

According to a report in the Financial Times, Huawei is working on a plan to develop its own chip plant in Shanghai. Trump administration sanctions prohibit any company from using U.S. software or equipment to sell chips to Huawei without a license from the Department of Commerce. Huawei’s planned chip plant would not use American technology, the Times reported, which will allow it to secure supplies for its core telecom infrastructure business.

Interestingly, Huawei itself would not run the plant, per the report. Instead, it would be run by one of its partners, the Shanghai IC R&D Center, a chip research company with government support. The move is also not surprisingly, however, since Huawei has no experience in chip manufacturing.

The Times reports that Huawei’s plant will initially begin making 45nm chips, a low-end chip that industry leaders began to use 15 years ago. Sources told the outlet that the company aims to start manufacturing more advanced 28nm chips, used in smart TVs and other IoT devices, by the end of 2021. Its goal is to produce 20nm chips, which could be used in most of its 5G telecoms equipment, by late 2022.

Nonetheless, these plans probably won’t help Huawei’s mobile division, a part of the company that has been particularly affected by U.S. sanctions, a semiconductor industry representative told the Times. This is due to the fact that “chipsets needed for smartphones need to be produced at more advanced technology nodes,” the representative said.

In August, company officials said they had “no chips and no supply” to make their smartphones. Huawei also revealed that it would not be able to make its own most advanced chips, or Kirin chips, after Sept. 15 because they are produced by contractors that use American manufacturing technology.

Huawei and the Chinese government recognize the country’s dependence on imported chips, and have made moves in the past to try to address it. For its part, Huawei has invested in domestic semiconductor manufacturing companies, according to the Times. Meanwhile, the Chinese government has poured buckets of money into the chip sector.

The Shanghai chip plant could turn out to be a long-term solution for Huawei, which has struggled because of U.S. sanctions and accusations that it could spy for the Chinese government. The company denies that it spies for China.

Financial Times