Exclusive: Inside Huawei's mission to boost China's tech prowess
In fighting a U.S. clampdown, the company has helped make domestic players stronger
CHENG TING-FANG, LAULY LI, SHUNSUKE TABETA
DECEMBER 18, 2024
TAIPEI/BEIJING --
When a team of Huawei engineers arrived in Jiangyin two years ago, they had an urgent mission: turn little-known supplier SJ Semiconductor into a competitive player in chip packaging and stacking technologies.
Chip packaging is becoming almost as important as chip manufacturing itself in the
AI semiconductors. Taiwan Semiconductor Manufacturing Co.’s CoWoS packaging is the gold standard in the industry, used by Nvidia, Amazon and all other top chip designers for their AI offerings.
But when U.S. export controls cut off Huawei’s access to TSMC and other foreign suppliers, the company turned its attention to domestic solutions.
"Huawei's HiSilicon sent an elite task force there to help them improve packaging technologies for use with its own AI processing chip performance," one executive with knowledge of the matter told Nikkei Asia, referring to Huawei’s chip design unit.
Now, SJ Semiconductor is able to provide a viable alternative to TSMC’s technology, with a peak capacity roughly one-tenth that of what the Taiwanese giant is capable of, sources briefed on the matter said.
“In this area, it’s easier than in advanced chip manufacturing and they have achieved some progress,” another executive said. “They won’t sit still. Advanced packaging is what they need for AI computing. It’s one of the key lifelines to advanced chip technologies.”
This is just one example of how Huawei's attempts to overcome a U.S. blacklisting and maintain its technological edge are boosting China's tech supply chain as a whole.
SiEn (QingDao) Integrated Circuits, a lesser-known chipmaker headquartered in Shandong province, has also received support from a special Huawei task force over the past two years. In that time, SiEn has constructed two additional plants and is conducting test production of 14-nanometer chips, well more advanced than its previous products. The company aims to advance into 7-nm node production, similar to what China's top chipmaker, Semiconductor Manufacturing International Corp. (SMIC), is capable of though still short of the 3-nm made by TSMC.
SwaySure, a memory chipmaker based in Shenzhen, has developed technology similar to Taiwan's Nanya Technology, the world's fourth-largest DRAM chip provider. Sources told Nikkei Asia that Huawei's strategic support has been instrumental in SwaySure's rapid advancement. SwaySure is even exploring high-bandwidth memory (HBM) technologies, a critical component for AI computing whose production is dominated by SK Hynix and Samsung of South Korea, and Micron of the U.S., Nikkei Asia has learned.
SMIC, which helped Huawei produce a 7-nm mobile chip last year, SiEn and SwaySure are all on Washington's Entity List, with the latter two added to the blacklist in December as part of the latest U.S. move to curb China's tech advancement.
Huawei, which was added to the Entity List in 2019, has hired hundreds of engineers with experience working at TSMC, Intel, Applied Materials and KLA in recent years, deploying them to support its production partners across China, multiple industry managers told Nikkei Asia.
Members of these Huawei task forces are present during Chinese chipmakers' technical meetings and serve as technical consultants to help the companies overcome production and development bottlenecks, sources said.
"If you dig into some chipmakers or tech companies that are now doing more advanced technologies in China ... very often you will find the shadow of Huawei," one chip industry executive said. "I don't want to exaggerate things, but Huawei still leads in many R&D efforts and leading technology developments in China."
Huawei, SJ, SiEn and SwaySure did not respond to Nikkei Asia’s requests for comments.
Prospering under pressure
More than five years have passed since the U.S. placed Huawei on its trade blacklist. During that time, Washington has also imposed several waves of export controls targeting hundreds of Chinese chip developers, tool and material makers and research and development centers.
Through it all, China's determination to advance its tech industry has not wavered.
U.S. export controls have effectively thwarted China's capability to produce the most advanced chips and cut its access to top international suppliers. Beyond the most cutting-edge segment, however, Washington's efforts have actually accelerated China's push to replace foreign tech supply chains with domestic alternatives, a Nikkei Asia analysis shows.
China has developed competitive domestic solutions in a wide range of segments, including certain chips, chip substrates, printed circuit boards, displays, batteries, camera lenses, metal casings and final assembly. Not only have geopolitical tensions prompted China's tech industry to prioritize the adoption of domestic components once a local solution is available, many Chinese suppliers have emerged as leading global players, edging out former market leaders from the U.S., Europe, Japan, South Korea and Taiwan.
While many governments do not view these components as strategically important, they are still essential for the production of electronic equipment and devices. The emerging parallel Chinese supply ecosystem, moreover, has increased competition and sparked concerns of oversupply amid a slow recovery in global electronics demand.
And while China's supply chain grows, so too does its brands' global influence. Chinese smartphone makers command nearly 60% of the global market, according to research firm Omdia, while Chinese TV makers have captured 42% of the global market, thanks largely to its dominant share in the display industry, TrendForce data showed.
