Embarrassed by failed sanctions, US to launch investigation on how Huawei developed their own chip

Furious that China’s Huawei could still develop its own 7nm 5G chip while being slapped with sanctions, the US has now announced that they will be going after Huawei and will launch a full-scale investigation into them.

The US has been left stymied as to how China’s Huawei got the technology to fabricate its own high-performance silicon chip.

The White House seems worried
The White House has expressed interest in gathering detailed information about Huawei’s latest flagship smartphone. This development is considered a significant milestone for the Chinese tech giant, coming four years after US restrictions severely impacted its handset business.

US National Security Adviser Jake Sullivan mentioned Tuesday that the United States seeks to obtain “more information” regarding the specific “character and composition” of the chip powering Huawei’s newly released Mate 60 Pro.

This comment was made in response to a question during a briefing, addressing concerns about whether US controls on exports of advanced semiconductor technology were being circumvented.

China’s SMIC has cracked the process to make complex chips
While Huawei has not disclosed the details of its suppliers for the Mate 60 Pro, a recent teardown of the phone conducted by the consulting firm TechInsights suggested that it contained a 7-nanometer processor manufactured by Semiconductor Manufacturing International Corp (SMIC). SMIC has not yet responded to requests for comment.

It’s important to note that SMIC, a partially state-owned Chinese chipmaker, became subject to export restrictions three years ago due to concerns expressed by the US Commerce Department regarding the “unacceptable risk” of chip technology being diverted for “military end use.”

Despite these restrictions, SMIC reportedly started producing chips at the advanced 7nm level last year for bitcoin mining, which was a surprising development given US efforts to limit its access to the latest foreign chipmaking equipment.

While SMIC is not yet on par with TSMC, experts suggest that the Huawei smartphone showcases the technical progress made by China’s chip sector, despite not having access to the latest extreme ultraviolet lithography tools.

US’s attempt to stop China from getting silicon-making equipment
The US has sought to prevent the export of extreme ultraviolet (EUV) machines, crucial for manufacturing chips at nodes of 7nm and below, to China. This development may lead to increased restrictions aimed at limiting China’s access to critical manufacturing technologies.

Sullivan clarified that the US would maintain its approach of imposing “technology restrictions focused narrowly on national security concerns” rather than engaging in “commercial decoupling.”

US sanctions imposed on Huawei in 2019 prohibited the company from sourcing advanced chips, equipment, and software from the US for its 5G smartphones, leading it to shift its focus towards selling 4G devices and the domestic market.

Some analysts believe that the release of the Mate 60 Pro could rejuvenate Huawei’s smartphone business, which had experienced a sharp decline in sales following US sanctions. Ming-Chi Kuo, an analyst at TF International Securities, predicted that Huawei could ship up to 6 million units of the Pro within four months of its launch, contributing to a 65 per cent increase in the company’s overall phone shipments this year to reach 38 million units. This growth would position Huawei as “the world’s mobile phone brand with the most robust shipment growth momentum,” according to Kuo.