admin@healthyinsure.net

American strikes at a Huawei price: Chip Juggernaut HiSilicon

US Strikes at a Huawei Prize: Chip Juggernaut HiSilicon

The most recent U.S. government action against Huawei from China targets directly the company’s HiSilicon chip division – a company that has become at the center of China’s semiconductor technology ambitions in a few years, but will now lose access to tools critical to its success.

That could make it the most damaging US attack to date on a Chinese company, of which US officials told journalists on Wednesday that it was an “instrument of strategic influence” for the Chinese Communist Party. For its part, Huawei Technologies denounced the US allegations, calling the new measures “arbitrary and harmful”.

Founded in 2004, HiSilicon mainly develops chips for Huawei, and most of its existence has been an afterthought in a global chip business dominated by American, Korean and Japanese companies. Like most electronics companies, Huawei relied on others for the chips that powered its equipment.

However, heavy investment in research and development contributed to rapid progress at HiSilicon, and in recent years the unit with 7,000 employees has been at the heart of Huawei’s emergence as the dominant player in global smartphone operations and emerging 5G telecom networks.

HiSilicon’s Kirin smartphone processor is now considered comparable to that of Apple and Qualcomm – a rare example of an advanced Chinese semiconductor product that competes worldwide.

HiSilicon is also at the center of Huawei’s leadership in 5G, stepping into the breach when the United States cut access to some US chips last year.

In March, Huawei revealed that 8 percent of the 50,000 5G base stations it sold in 2019 did not have US technology, instead using HiSilicon chipsets.

But the US export control rule, which was reported last week, aims to block HiSilicon’s access to two critical tools: chip design software from US companies, including Cadence Design Systems and Synopsys, and the production power of “foundries” led by Taiwan Semiconductor Manufacturing Co (TSMC), which builds chips for many of the world’s top semiconductor companies.

With the new restrictions, HiSilicon will be “in a situation where they cannot produce chips at all, or if they do, they will no longer be leaders,” said Stewart Randall, who follows the Chinese chip industry in Shanghai-based consultancy Intralink .

Without its own processors, Huawei will lose its lead over domestic smartphone rivals, analysts said. International sales had already been damaged by a ban on the use of important Google software.

Industry sources say that Huawei has stored chips and the new US rule will not come into effect for 120 days. U.S. officials also note that licensing may be available for some technologies. HiSilicon can also continue to use the already acquired design software.

HISilicon in difficult place
Still, analysts agree that HiSilicon is struggling. Nearly all chip factories worldwide – including China’s leading foundry, Semiconductor Manufacturing International – purchase equipment from the same equipment manufacturers, led by American companies Applied Materials, Lam Research and KLA.

The new US rule requires licenses for companies that use American machines to build and supply Huawei-designed chips to the Chinese company. Certainly, the new rule does not apply to items shipped to a third party, which allows HiSilicon manufacturers like TSMC to send chips to HiSilicon device manufacturers, who can send them directly to a customer.

While there are alternatives to American machines – Japan’s Electron, for example, makes equipment that competes with Applied Materials – replacing American technology is not as simple as replacing a machine.

“You should almost think of it as a heart transplant,” said Dan Hutcheson, CEO of VLSI Research, 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 said that Huawei had a few options. It would get around the rule by having suppliers ship directly to Huawei customers, although U.S. officials said they would be vigilant about such solutions.

Huawei and the Chinese government were able to double their efforts to build manufacturing capabilities that did not require US tools by investing in emerging Chinese competitors and buying from Japanese and Korean companies, even if they required quality sacrifices.

Or Huawei may turn away from HiSilicon and return to purchases from foreign suppliers – but not American ones. “There is talk of Huawei turning to Samsung processors,” said Fuller.

© Thomson Reuters 2020


Is Redmi Note 9 Pro Max the best affordable camera phone in India? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to Apple Podcasts or RSS, download the episode, or press the play button below.

.

Leave a Reply

Your email address will not be published. Required fields are marked *