US strikes at a Huawei prize: chip design company HiSilicon

New US export control rule could be Washington’s most damaging attack yet against Huawei, the world’s largest telecommunications equipment vendor

It would block HiSilicon’s access to US chip design software and major semiconductor foundries, led by TSMC

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New US restrictions could stifle efforts by Huawei Technologies to develop its own advanced chips through subsidiary HiSilicon. Photo: Reuters

Published: 8:14am, 22 May 2020Updated: 8:37am, 22 May 2020

The latest US government action against Huawei Technologies takes direct aim at the company’s HiSilicon division – the chip design business that in a few short years has become central to China’s ambitions in semiconductor technology, but will now lose access to tools that are central to its success.

That could make it the most damaging US attack yet against China’s largest technology company that functioned as a “tool of strategic influence” for the Chinese Communist Party, US officials told reporters on Wednesday. Huawei, for its part, denounced the US allegations and called the new measures “arbitrary and pernicious”.

Established in 2004, HiSilicon develops chips mostly for Huawei, and for most of its existence has been an afterthought in a global semiconductor business dominated by US, South Korean and Japanese companies. Like most electronics firms, Huawei relied on others for the chips that powered its equipment.

But heavy investment in research and development helped drive rapid progress at HiSilicon, and in recent years the 7,000-employee unit has been central to Huawei’s rise as a major player in the global smartphone industry and the emerging 5G mobile network equipment market.

An illuminated billboard displays Huawei Technologies’ Kirin 990 flagship system-on-a-chip for 5G, as the company's exhibition stand is prepared at the IFA consumer electronics show in Berlin, Germany, in September of last year. Photo: Bloomberg

HiSilicon’s Kirin smartphone processor, for example, is now considered to be on par with those designed by Apple and Qualcomm – a rare example of an advanced Chinese semiconductor product that competes globally.

Huawei’s chip subsidiary is also central to the company’s leadership in 5G mobile equipment, stepping into the breach when the Trump administration cut off access to some US chips last year.

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