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
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.
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.
With the new restrictions，HiSilicon “will be in a situation where they’re not able to manufacture chips at all, or if they do, then they’re not leading edge any more”, said Stewart Randall, who tracks China’s chip industry at Shanghai-based consultancy Intralink.
US regulators open door to possible tightening of Huawei chip curb
Without its own processors, Huawei will lose its edge over domestic smartphone rivals, analysts said. International sales had already been gutted by a ban on the use of key Google software.
The new US rule requires licences for companies using US machinery to build Huawei-designed chips and delivered to the Chinese firm. To be sure, the new rule will not catch items shipped to a third party, allowing HiSilicon’s fabricators like TSMC the ability to ship chips to HiSilicon’s device manufacturers who can send them directly to a customer.
HiSilicon overtakes Qualcomm as China’s top smartphone processor supplier
While there are alternatives to American chip manufacturing equipment – Japan’s Tokyo Electron, for example, makes gear that competes with Applied Materials – replacing US technology is not as simple as swapping out a machine.
“You almost have to think about it like a heart transplant,” said VLSI Research chief executive Dan Hutcheson, noting that chip production lines are finely calibrated systems where everything has to work well together.
Doug Fuller of the Chinese University of Hong Kong (CUHK) said Huawei had a few options. It could slip around the rule by having suppliers ship directly to Huawei customers, though the US officials said they would be vigilant about such workarounds.
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Huawei and the Chinese government could also redouble efforts to build production capabilities that did not require US tools, by investing in nascent Chinese competitors and buying from Japanese and Korean firms, even if that required quality sacrifices.
