Chip Is The New Aim: Huawei bolster efforts to manufacture its own semiconductor products

Huawei is the largest telecom equipment maker for over three decades and throughout the time the company has revolutionized its telecom technologies to stay up and ahead of its competitors.

Similar to the telecom business, the Chinese tech giant has also advanced itself in enterprise solutions, CLOUD, and other key tech sectors. Furthermore, Huawei’s smartphone business has also seen remarkable growth in the past years.

However, the company had heavily relied on U.S.-made technologies and after the inclusion in the U.S. Entity List, Huawei was barred from accessing important components, which also increased some of the big problems such as the lack of chipsets.

According to a new report from NikkeiAsia, the Chinese tech giant has sped up efforts to build its own chipsets and engaging with several Chinese chipmakers for possible investments. On the other hand, the company keeps polishing its own chip design development skills.

To complete this goal, Huawei has taken stakes in 20 semiconductor-related firms over the course of the last one and a half years, while half of these deals have been made in the past five months. These investments mainly aim at chipmaking sectors that are currently dominated by tech giants from the U.S., Japan, South Korea, and Taiwan.

The investment also aims for chip design tools, semiconductor materials, compound semiconductor, and chip production and testing equipment, which are essential for producing a complete chip product. These also put a spotlight on Huawei’s aim to free itself from the dependence on U.S. made technologies and lead the tech development by itself.

Furthermore, Huawei is also building a small-scale chip manufacturing plant for research purposes in Shenzhen, of which reports also emerged last year.

“Broadly speaking, the importance of Huawei’s R&D production line in Shenzhen is to help accelerate chip development and to make sure all its designs can later be put into production smoothly,” said a source. “Construction of the line began in the latter half of 2020.”

Why Huawei is investing?

In May 2019, the U.S. commerce department added Huawei to the Entity List, which is the first ban on Huawei that prohibited the company from purchasing U.S.-made technology or selling its products in the country.

After a year, Huawei banned chipset suppliers including TSMC, from producing Huawei designed chipsets, which increased Huawei’s problems related to semiconductors. Later in September, the U.S. completely restricted Huawei’s access to chipsets.

However, in May 2019, Huawei also made its first investment and ramp it up in the coming year. Check the image below to learn more.

The Aim:

“The company aims to step into any area that it lacks in chip development, from chip production, materials, and equipment, to design software.” said a source to Nikkei.

To increase investment count, Huawei is in talks to take part in SiEn Integrated Circuits, a chipmaker founded in 2018. With this investment, Huawei would access a broad range of integrated chip development services from design and production to packaging and testing.

All of the investment-related work is handled by the Hubble Technology Investment, a Huawei subsidiary with a paid-in capital of 2.7 billion yuan ($417 million). Since its establishment in 2019, Hubble has made investments in at least 25 Chinese tech companies, of which 20 mainly develop semiconductor products.

Task/Challenge:

Despite all of the experience in chip designing, Huawei still needs the equipment to manufacture the chip designs.

From here we need to mention the very recent investment at NineCub, a Chinese chip-design toolmaker founded in 2011.

Chip design tools, also known as electronic design automation tools, are crucial for companies looking to design their own chipsets. The market and experts for the advanced chip design tools are controlled by only limited companies two of which are Synopsys and Cadence Design Systems, both of these are American. This led to U.S. dominance in this field and made a big impact after the full restrictions on Huawei.

HiSilicon, Huawei’s chip designing subsidiary, was China’s biggest chip developer and designed chipsets for Huawei smartphones, network gears as well as servers. After the U.S. ban, Richard Yu, CEO of Huawei Consumer Business Group officially informed that the company will stop making Kirin chipset after September 2020.

The report reveals that the investments also target local companies that supply materials for semiconductors, such as SICC and Tankblue Semiconductor, which make silicon carbide. Chip production equipment makers including Shenzhen Skyverse and Ningbo Allsemi Microelectronics Equipment are also on the list. To be mentioned, these fields are also dominated by tech companies from the U.S. and Japan.

This is undoubtedly the advancement of the Chinese tech giant, as it is marching ahead with the will to capitalize on this opportunity and to build its own semiconductor.