Friday, 22 September 2023

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Huawei’s chip breakthrough poses new threat to Apple in China

China's Huawei launch coinciding with Apple ban was a strategic decision, says UBS's Art Cashin

A man check his phone near an Apple logo outside its store in Shanghai, China September 13, 2023. 

Aly Song | Reuters

Apple is facing a number of issues in China, with geopolitical risks mounting and the economy still not firing as many would have hoped.

But the biggest challenge of all, according to analysts, could be a resurgent Huawei after a purported major semiconductor breakthrough that flew in the face of U.S. sanctions.

The latest chip, made by China’s biggest semiconductor manufacturer SMIC, has sparked concern in Washington and raised questions about how it was possible, without the company being able to access critical technologies.

But there is also scrutiny on whether the process being used to make these new chips is efficient enough on a large scale to sustain a Huawei comeback.

What has happened to Huawei so far?

What’s the big deal about Huawei’s new chip?

Alongside Apple and Samsung, Huawei is one of only a few companies that has designed its own smartphone processor. This was done through the Chinese firm’s HiSilicon division.

The chip however was manufactured by Taiwan Semiconductor Manufacturing Co., or TSMC. U.S. export restrictions, which effectively barred Huawei from using American technology anywhere along the chipmaking process, meant the Chinese company could no longer source its chips from TSMC.

The Taiwanese chipmaker is the most advanced semiconductor manufacturer in the world. There is no Chinese company that can do what TSMC does. That’s why shockwaves were sent through the political and tech world when Huawei quietly released the Mate 60 Pro in China this month, with analysis showing a chip inside made by SMIC.

Along with Huawei, SMIC is on a U.S. trade blacklist called the Entity List. Companies on this list are restricted from buying American technology. Meanwhile, SMIC’s technology is seen as generations behinds the likes of TSMC.

So how could this have been done with the huge amount of sanctions on both Huawei and SMIC?

What we know about Huawei’s chip

Huawei’s smartphone chip is called the Kirin 9000S, which combines the processor and components for what appears to be 5G connectivity. 5G refers to next-generation mobile internet that promises super-fast speeds. Huawei has not confirmed the phone is 5G capable, but reviews have shown the device is capable of hitting download speeds associated with 5G.

The semiconductor has been manufactured using a 7 nanometer process by SMIC, China’s biggest contract chipmaker, according to an…

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