Huawei chip unit said to be switching orders from TSMC to SMIC as US restrictions loom
- While SMIC is seen as the strongest mainland China alternative to TSMC, it remains well behind TSMC in its technological expertise
- Analysts estimate that by late 2019 Huawei accounted for 13 per cent to 15 per cent of TSMC’s sales
Huawei Technologies is gradually shifting production of chips designed in-house away from Taiwan Semiconductor Manufacturing Co (TSMC) and towards a mainland Chinese firm in preparation for more US restrictions, sources familiar with the matter said.
The move towards Shanghai-based Semiconductor Manufacturing International Corp (SMIC) comes as Washington readies new rules which would require foreign companies using US chipmaking equipment to obtain a license before supplying chips to Huawei – rules that would directly affect TSMC.
It also highlights how US restrictions against Huawei can act as an impetus for Chinese companies to accelerate the development of home-grown technology.
The US 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 US 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.”