Huawei’s chip unit says it prepared years ago for doomsday scenario of US tech ban
- Huawei chip unit HiSilicon said it anticipated US may cut off access to advanced components and technology
- Backup plan should ensure continuity of supply for most of Huawei’s products, HiSilicon president says in memo
Years ago when Huawei’s wholly owned semiconductor unit drew up its contingency plans, executives discussed the various doomsday scenarios that could deal a death blow to the group. One such scenario was the US cutting off access to advanced chips and technology.
Though hopeful that it would never happen, HiSilicon devoted significant resources to building a backup to ensure the survival of the group, according to a memo by Teresa He Tingbo, the company president.
With the US putting Huawei and its affiliates on a trade blacklist, that backup plan is being put to use and will “ensure the strategic safety of most of the company’s products and the continuous supply of most products”, He said, in what is one of the most detailed public description of a contingency plan.
Written in emotive language, the memo was one of the top trending topics on Twitter-like social media platform Weibo on Friday. Most of the posts expressed support for Huawei, though it is not possible to verify whether they were made by independent users. Huawei confirmed the authenticity of the memo but declined to provide further comment.
The trade blacklist would require Huawei and its affiliates to obtain approval from the US government to buy from American companies. On the same day, US President Donald Trump signed an executive order barring the use of telecommunications equipment from companies that are deemed a threat to national security, clearing the way for an outright US ban on products made by Huawei, though the order did not name China or Chinese companies specifically.
The US has expressed concerns that Huawei would act as an agent for the Chinese government and that its equipment would pose a threat to US civilian and military communications infrastructure, and that of its allies. China has said that the US was unfairly suppressing a Chinese company, while Huawei has suggested previously that actions against the company were prompted by the US realising it was lagging behind in a crucial race for 5G, seen by many as the foundation upon which advanced technologies such as artificial intelligence are built upon.
In Friday’s memo, HiSilicon’s He compared the efforts to create a “spare tyre” to being the “most tragic and heroic Long March in the history of science and technology”, the Long March being a reference to the 10,000-kilometre (6,000 miles) trek of the Chinese communists in the 1930s.
Through HiSilicon, Shenzhen-based Huawei has been developing its own chipsets for use in its smartphone and networking products, which are considered Intel and Qualcomm alternatives, while the company confirmed in March that it has developed its own operating systems (OS) for smartphones and computers in case those provided by US technology firms are no longer available.
Huawei has been stockpiling critical US components for almost a year, according to separate reports by research houses Haitong and Canalys. The move was to ensure it can continue making its products that rely on core technology from US suppliers such as Intel and Qualcomm.
Support for the company poured in on China’s social media on Friday morning with “HiSilicon’s midnight internal letter” becoming one of the top trending topics on Weibo, attracting more than 210 million views and 98,000 posts in a few hours.
“I cried when reading this. This is so inspiring and reminds me of the spirits of those unnamed scientists who developed the nuclear weapons. Go Huawei! Go China!” a Weibo user named “YichenForever” wrote.
Another posting, by “TaihuXianA”, said that “Huawei is visionary and worthy of our respect,” one of the most upvoted comments. Yet another user, “WozaiDujieWanghou”, proposed boycotting Apple in retaliation for the US action on Huawei.
Some posts cast doubt on HiSilicon’s assertion it can function without US technology.
One Weibo user named “AichangChungtianli” raised doubts about Huawei’s true ability to achieve its visions. “You cannot make a thing without the software from the US. Who gave you the courage?”
Huawei’s crosstown competitor ZTE Corp was added to the Entity List in March 2016, though the BIS suspended the restrictions just over two weeks later after ZTE agreed to cooperate with a US government investigation into the company’s alleged violations of US sanctions and export control laws. In March 2017, ZTE reached a US$1.19 billion civil and criminal settlement with the US government, which lifted an earlier denial order that prevented it from buying US products. The imposition of the denial order brought ZTE to the brink of collapse.
