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How Much Should We Worry About Huawei’s Technology?

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Bruce J. Smith III

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The WealthKare Investment Center
Office : (814) 542-5433
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The Chinese communications gear company Huawei claims to be using a tiny, tiny chip in its new Mate 60 Pro phone - technology China is not supposed to have achieved. Is it cause for competitive worry? Very unlikely. The vaunted 7 nanometer chip used by Huawei and fabricated by Semiconductor Manufacturing International Corp. (SMIC) is probably a statement of nationalistic bravado rather than a commercial product.


Customers experience the newly released Huawei Mate 60 Pro flagship phone at Huawei's flagship store in Shanghai, China, September 5, 2023. The phone comes with Huawei's latest Hormony 4.0 system, a Kirin 9000s chip, a satellite phone and 5G standard Internet speeds. (Photo by Costfoto/NurPhoto via Getty Images)


The U.S. government is undertaking a probe into the Mate Pro smartphone and into SMIC, since the technology is supposed to be too advanced for China to develop without importing technology that the U.S. has banned. Geely, the Chinese automaker, also says it is using the chip in an SUV.

The chip is called the Kirin 9000s. Over a year ago, the semiconductor analyst Dylan Patel reported that SMIC had quietly begun to ship these 7 nm chips. The question is, could Huawei and SMIC develop this technology on their own? The probable answer is yes, but not at scale or economically.

SMIC can make 14 nm chips. That technology - “Deep Ultraviolet” or DUV - can be applied to 7 nm chips, but only after altering the design and accepting high failure rates. Without the better suited “Extreme Ultraviolet” (EUV) technology, SMIC would need to use repeated burn cycles, yielding only a small proportion of good chips and tying up very costly equipment. Many in the IC industry believe that SMIC’s 7 nm chip might be twice as expensive as the comparable chip made at Taiwan Semiconductor (TSMC).

U.S. export controls have made China very angry, and the IC complex - heavily dependent on government subsidies - is out to prove it can go it alone. But U.S. restrictions can be very leaky. Many advanced companies, such as Intel INTC, have a complete manufacturing chain within China, and Chinese companies would need only to poach staff. Others, including Lam Research LRCX, a leader in semi equipment that does etch, deposition, and electroplating, has both outsourced production and its own factory in Malaysia, a big promoter of China and its tech ambitions.

By Anne Stevenson-Yang, Contributor

© 2024 Forbes Media LLC. All Rights Reserved

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Bruce J. Smith III profile photo

Bruce J. Smith III

President
The WealthKare Investment Center
Office : (814) 542-5433
Schedule a meeting