The U.S. is looking for every loophole that can help Huawei in the advanced chipmaking process. A recent report said that the Biden administration may soon add more Chinese firms to the Entity list, blocking the growth of the chip network in China.

Apart from keeping an eye on China, the U.S. is now investigating other foreign suppliers who can lend a hand to Huawei in semiconductor manufacturing.

Inputs reveal that the U.S. Commerce Department started probing TSMC for chip dealings with Huawei. The investigation is in the early stages and aims to check if the chipmaker has been making any AI or phone chips for Huawei for the time being.

If TSMC is found breaching the U.S. export regulations, it might face huge penalties or even a prohibition on using advanced chipmaking tools or techs temporarily.

Under this investigation, the U.S. authorities have targeted the Mate 60 series’ Kirin 5G 9000s chip and recently developed AI Ascend processor. Both these chipsets significantly contribute to China’s progress in the semiconductor industry.

The Commerce Department inquired TSMC about having any direct or indirect (via different names) chip shipments to Huawei in the past or at present. Investigators are also looking into other related aspects like “know-your-customer checks”.

Issues for TSMC

Further details note that the investigation could trouble TSMC to some extent. The Taiwanese chipmaker is one of the key chipset suppliers for U.S. firms.

Huawei AI chipsets (Image Credits: Huawei)

For instance, Apple and Nvidia mainly rely on TSMC for their processors. Also, the Biden administration was planning a $6.6 billion subsidy for the chipmaker to develop its third fabrication unit in Arizona. However, an investigation could halt benefits for some time.

TSMC responded to this investigation and said that it follows all the U.S. export regulations without fail. Although if there is a problem, then it will take action to guarantee compliance in all possible aspects.

“TSMC is a law-abiding company and we are committed to complying with all applicable regulations. If we have any reason to believe there are issues, we will take prompt action to ensure compliance.”

HuaweiCentral’s Take

The U.S. will try every effort to push back Huawei as done in 2019. But this time, the Chinese OEM is focusing on being self-reliant. A recent report claimed that Huawei Kirin 7nm chip performance can match the level of the 5nm processor of TSMC.

How far the U.S. will stretch this investigation on TSMC chip dealings with Huawei would be worth looking forward to.

U.S. investigates TSMC on chip dealings with Huawei (Image Credits: Huawei/TSMC)

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Huawei is unable to access high-end chipmaking tools due to U.S. sanctions. Now the foreign authorities are planning more challenges for the company in semiconductor manufacturing. They are pressing Biden to impose more restrictions.

Chairman John Moolenaar and Ranking Member Raja Krishnamoorthi – the members of the House Select Committee on strategic conflicts between the U.S. and China, recently wrote a letter to Gina Raimondo (Commerce Secretary) on Chinese tech progress concerns.

The letter highlights that the Biden administration should increase export controls to block Huawei’s secretive chip network growth. The “clandestine semiconductor facilities” of Huawei will ultimately harm U.S. security on a large scale.

“…Just as you have taken steps to prohibit Huawei from purchasing U.S. chips, it is similarly important and logical to restrict the flow of SME to prevent Huawei from fabricating its chips. Restricting the flow… will send an important signal to… Huawei that the United States will take action to prevent U.S. technology from enabling its problematic technology ambitions.” (via)

According to Bloomberg, Huawei is currently teaming up with Pengxinxu, SwaySure Technology, and Qingdao SiEn to expand its chip network. These firms are free from U.S. restrictions and do not count in the Entity list.

US lawmakers urge tougher restrictions on Huawei chip tech: Report (Image Credits: Huawei)

Huawei also collaborated with the PXW Semiconductor to accelerate its chipmaking process. But later, the U.S. added the respective firm to the entity list, prohibiting it from accessing advanced technologies. Now they are planning the same treatment for the above-mentioned firms to block ways for Huawei.

The Commerce Department has said to respond on this matter soon with their appropriate mediums.

Huawei launched a 7nm chip last year which belongs to the SMIC foundry. Since then, the U.S. started eyeing the OEM for every step it takes in chipmaking.

The U.S. authorities canceled the licenses of many foreign semiconductor firms from selling chipsets or chipmaking equipment to Huawei. ASML is one of the major examples of this aspect. Now lawmakers are urging to ban 120+ Chinese companies and impose fresh restrictions on chip tool sales in China.

Apart from its own efforts, the U.S. is pressuring its neighboring countries to impose the same restrictions on China. Although they didn’t show much interest.

How Huawei will make its steps more firm in the chip tech field amid these US restrictions and export problems would be worth looking forward to.

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Reuters recently reported that California Democrats are requesting the US authorities to pause their plans of further restrictions on Chinese companies like Huawei.

The democrats said so as they believe that one-sided sanctions will only aid foreign competitors, causing the U.S. business sector to fail. Some officials even stated that another round of sanctions could push the long-running US firms into a “death trap”.

On August 13th, two California lawmakers- Alex Padilla and Zoe Lofgren shared their concerns on this matter to Alan Estevez via a letter. Alan is a major executive at the U.S. Commerce Department who mainly looks after the export controls.

The letter read:

“We ask that you pause additional unilateral export controls until you have adequately justified that such controls will not damage US competitiveness in advanced semiconductors and semiconductor manufacturing equipment.”

Padilla and Zoe clarified that they don’t want a complete rollback of trade regulations on China. However, they stress how these restrictions will bring questionable security benefits when the authorities aren’t taking similar measures on this concept.

After this letter, the Commerce Department said that it will soon respond on this matter through appropriate means. It seems Huawei and other Chinese firms might get relief from the export restrictions, following the US business failure concerns.

The letter shows an aggressive move from California Democrats against the US Commerce Department. California is the leading state for making chips. It’s the home to the US’s top chip manufacturing units like LAM, KLA, Applied Materials, and more.

Huawei might get some relief from tough US export restrictions (Image Credits: Huawei)

It’s not the first time that California lawmakers urged the U.S. authorities to freeze their restrictions. In April, Padilla and Governor Gavin Newsom requested the administration to take back their decision to cancel a subsidy program for the chip R&D sector.

Huawei Central’s Take:

Everything combined, the U.S. had to take some measures that could save its top business companies leading to failure. The U.S. authorities thought that tightening controls on Chinese firms would shield their national security in every possible way.

They did so under the concern that China may use advanced techs to hinder the US users’ security and boost its own military. Huawei refused these allegations in 2019, saying that it has no connection to this matter. But things proved vain.

Over time, the foreign government kept increasing its restrictions on Chinese companies. They stopped many regions like the Netherlands, Japan, and Tokyo from shipping advanced chipmaking tools to China.

Now it seems the U.S. forgot to view these changes from all angles. Probably to save the largest semiconductors firm from falling into a death trap, the U.S. might free up Huawei from tough export restrictions. But the decision is still pending and needs time for confirmation.

Huawei might get some relief from tough US export restrictions (Image Credits: Reuters)

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According to a report, Huawei Cloud is looking at Asia-Pacific as a vast and potential market for its AI solutions. Regardless of the U.S. ban and trade restrictions, the company increased its AI services by 20 times in the region in past four years.

The President of Global Marketing and Services at the Huawei Cloud Unit, Jacqueline Shi attended a media interaction in Bangkok on Thursday. She said that the company will always be a major contributor to AI solutions in the Asia-Pacific market.

“For the (company’s) next step in the region, we will continue to provide comprehensive AI solutions,” said Jacqueline Shi.

With AI solutions, Huawei refers to Ascend Cloud Services, self-developed LLMs, generative AI, Pangu tech, the one-stop AI development platform ModelArts, and more.

The latest report implies that Huawei aims to branch its revenue stream worldwide. It further reflects that the company looks to chase more global customers. This will eventually help the firm to catch up with its opponents in the advanced AI era.

Huawei considers Asia-Pacific as potential market for AI: Report (Image Credits: Huawei)

Huawei also expects that its AI expansion plan will help it fulfill the rising demand for GenAI services for various industries. Another benefit is that the Asia-Pacific region acts as one of the biggest markets for Huawei in cloud computing services.

It has been the first stage for “serverless database” solutions before a global release. Huawei has recently launched an Arabic-language model in Egypt. The company also unveiled a data center in Riyadh, Saudi Arabia, last year for cloud services.

As of now, the tech giant has partnered with weather forecasters in Thailand. It will also deliver the Pangu LLM to improve efficiency and contribute to cost reduction in the country. It’s just the beginning and the company may soon launch more AI products to the region.

|| Source – SCMP ||

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Wuhan Xinxin (also known as XMC) is a Chinese semiconductor manufacturing firm founded in 2006. It offers a 12-inch wafer foundry and technical services related to 40nm, 3D flash memory chips, wafer fabrication sensors, and integrated circuits.

The Chinese tech maker has now joined forces with XMC to develop HBM chips. These processors play a vital role in AI projects due to high-performing graphics, ultra-wide communication, and low power consumption properties.

Wuhan Xinxin had issued a tender in March to establish an advanced fabrication area. This facility will be able to generate around 3000 wafers of 12 inches per month.

Apart from Wuhan Xinxin for HBM chips, Huawei has also tied up with other firms like Jiangsu and Tongfu Microelectronics that deal with integrated circuits (ICs).

These companies deliver advanced packaging tech (chip on wafer on the substrate) to pile up different chips in a single package. For instance GPUs, HBMs, and more.

Huawei Wuhan Xinxin teams up to build HBM chips (Image Credits: Huawei)

HBM chip development will ultimately help China enhance its AI and technological growth. Although it seems just the beginning and there’s still a long way to go. Huawei and its partners aim to develop HBM AI chips by 2026, according to a previous report.

ChangXin Memory Technologies has allegedly developed an HBM chip sample with Tongfu Microelectronics firm. Things will possibly ramp up in the next few years.

If succeeds, this move will aid Huawei in becoming independent in the AI sector despite U.S. challenges. China just began its journey to HBM chip. Although analysts are already keeping an eye on how the region progresses in this subject.

Huawei has already managed to drive demand for Ascend 910B in China, against Nvidia A100. Yet, it has to work hard for HBM chips to compete with opponents like Samsung and SK Hynix in the global market.

Simon Woo – the Managing Director of Asia-Pacific tech research at Bank of America Securities says:

“China’s chip supply chain is still insufficient for high-end memory fabrication, with its growth mainly focused on mid to low-end solutions.”

[Source – SCMP]

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According to Bloomberg, the Biden administration plans to blacklist some Chinese chip producers, specifically linked to Huawei. The U.S. is considering this step after the Mate 60 Pro developer brought in the 5G Kirin chipset (7nm process) last year.

If not more, at least four Chinese semiconductor firms are on the target list of the U.S. authorities and they might soon get imposed with more trade sanctions. The expanding restrictions aim to prohibit China’s AI and 5G chip development.

The information further reveals the name of chipmakers tagged in the blacklisting: Qingdao Si’En, SwaySure, and Shenzhen Pensun Tech Co., or PST. Another leading memory chip producer in this list is ChangXin Memory Technologies Incorporation.

On the other hand, the U.S. authorities may halt firms like Shenzhen Pengjin High-Tech Co. and SiCarrier from helping Huawei with restricted equipment. One of the senior analysts at Jefferies commented on this matter:

“Adding more Chinese companies to the U.S. Entity List is a highly likely event. It is easy to implement and justify, and it will further block certain key Chinese companies from being able to exploit current loopholes in export restrictions.”

U.S. sanctions on Huawei (Source: Reuters)

Restrictions from other nations:

That’s not it! The U.S. is even forcing countries like the Netherlands, Germany, South Korea, and Japan to make the restrictions more rigid on Huawei for accessing significant equipment and technologies that relate to chip manufacturing.

Even though the foreign government can ban businesses that could harm its nation’s security, these aren’t the final decisions and the U.S. government is currently just seeking these steps. However, this action will certainly impact US-China relations and their ongoing policy considerations.

Huawei chip network has been under U.S. sanctions since 2019 in the name of security threats. Although the company surprised everyone releasing a 5G Kirin chip in 2023 with the Mate 60 series, with the help of SMIC. The 7nm processor implied China’s progress in the semiconductor field, which is why the U.S. is trying to increase challenges.

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Eventually, the U.S. is now eyeing SMIC works and imposing more new import restrictions, after it produced a chipset for the Huawei Mate 60 Pro. Perhaps, the authorities are putting obstacles in making China-made advanced processors.

Last year, the U.S. Commerce Department sent several letters to native suppliers to prohibit SMIC’s most advanced plant imports in the region. Meanwhile, many U.S. firms already pulled their hands from selling to SMIC South plants.

Entegris, one of the chipmaking materials and parts suppliers says that it used to work with SMIC via a valid export license. However, it had to halt working after receiving letters from authorities to stop sending products to SMIC South.

Adding more, Entegris mentions that it verifies and adheres to the rapidly evolving regulatory requirements for global trade that impact the chip industry.

Rising Chips Concerns

Notably, the U.S. is taking significant actions against SMIC as it believes that China aims to interrupt the rising U.S. technology and degrade its capability of making advanced chips. On the other hand, the Chinese embassy has a different perspective:

“This is out-and-out economic bullying and will inevitably backfire. We urge the U.S. side to stop overstretching the concept of national security and abusing the state power to suppress Chinese companies.” – said a Chinese embassy spokesperson in Washington.

After Huawei surprised the world with Mate 60 Pro and its Kirin 5G chip, the U.S. is keeping a strict eye on the Chinese grinds. Even though strict bans and challenges, Huawei made its way to bring out a capable semiconductor on board.

Thereafter, the U.S. investigated the device to learn about the techs and mechanisms used for making the new chip. Consequently, this move by Huawei raised several concerns for the U.S. authorities related to advanced chip manufacturing.

U.S. Ban:

Since 2019, Huawei and some other Chinese companies have been struggling with U.S. trade rules and unnecessary sanctions in the name of security. Trump brought some relief to these firms by allowing the export of certain items to Huawei and SMIC. Yet, things changed with the Biden administration.

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Recently, the assistant secretary of the Commerce Department for export control – Matthew Axelrod attended corporate compliance in Manhattan. During the meeting, the executive said that the government is looking to raise charges on those who defy the trading regulations.

“There are going to have to be some penalties that get everyone’s attention. I think we’re on the cusp of that.”

It is not the first time that U.S. authorities are putting fines on firms for going against their export controls. In April 2023, the U.S. imposed a tax of $300 million on Seagate for reportedly selling around 7 million hard drives to Huawei.

But in the current scenario, the American government wants to introduce more ‘big-ticket’ corporate resolutions to stop the trade rules violations. These changes could create more problems for Chinese firms in solidifying their position on a global scale.

In addition, Matthew put forth new changes and a self-disclosure policy that can fix minor defying issues immediately and help authorities focus on major ones. It allows companies to accept and report their violations on the table.

Last year, the U.S. Deputy Attorney General – Lisa Monaco cited that the sanction is the new Foreign Corrupt Practices Act. Besides, she introduced tough applications of trading rules in the name of the country’s security.

Everything combined, Matthew said that the aim of raising penalties is to protect the U.S. trade rules from Chinese and Russian companies. It also shields the country from unauthorized access to security and misuse of advanced technologies.

Impact on Huawei?

It seems like the upcoming time in the foreign business market is going to be tougher and harsh for Chinese firms. However, Huawei began cutting ties with the U.S., knowing that the chances were quite low to set its legs in the respective market.

Moreover, the company is looking for better replacements and meeting new partners that can help it take its stand on the global surface without the support of U.S.-based components. It would be worth seeing what else comes amid U.S.-China disputes.

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Earlier, we reported that the company is cutting ties with the U.S. and Canada on public relations. Huawei started the process speedily after the New Year, acknowledging the lowest possibilities for a breakthrough in the respective market.

As of now, Huawei has begun to shutdown lobbying operations in the U.S. Two of the registered lobbyists – Jeff Hogg and Donald Morrissey recently departed with a handful of staff members. This act silently marked an end to the constant spending of millions of dollars to maintain the company’s existence in the region.

The information further reveals that Huawei had nine lobbying sectors as well as some public relations staff in the U.S. The company kept on meeting major executives and splurged around $13 million in the past decade. Although it’s time to step back and play an independent game.

U.S. Ban

Huawei was encircled with several restrictions and warnings for spy treatment and being a threat to users’ security. Despite Huawei’s claims that none of its products is harmful, the U.S. authorities put barricades on selling Huawei’s items in the region.

Meanwhile, the company continued to put in efforts and get back its presence in the American market by spending both money and time. The company has spent $1.8 million on lobbying within a single quarter in 2019 when the ban was being initiated. This number reached $3.6 million in 2021.

However, the company has looked after several aspects and addressed the probability of setting its legs back in the United States. Moreover, Huawei lost many outside lobbying firms in this process. Imperium Global Advisors and LeMunyon Group concluded their contracts with Huawei in November 2023.

This again only have been a subject of loss for the Chinese tech maker. China has blamed the U.S. for misusing its power and intentionally staggering Chinese firms. However, Huawei has started taking its stand and moving to new aims.

New Milestones

After the Mate 60 Pro, the company is planning to boost the expansion of Kirin chipsets. At the same time, Huawei has triggered its supply chain to initiate 3x shipments this year. The tech giant is now mainly focusing on the Chinese market and sales revenue. Perhaps, new models like the P70 series will be game changers in the growth aspect in time ahead.

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Perhaps, Nvidia could continue the development of its powerful H20 AI chips for China and officially introduce it in Q2 2024. The processor was hearsay to show up in October last year. However, issues with server manufacturers led to the progress in delay.

As of now, the information reveals that the initial production volume of these chips will be limited and the company will focus on completing chip orders for its major customers in China.

Consequently, Nvidia has three chips to unveil in China amid US restrictions. These are H20, L20, and L2. None of these have been announced yet. The company believes that these inventions will help retain its market share in the region.

It is worth mentioning that all three processors contain the latest AI features with effective computing power to twin with U.S. trade regulations. The chip maker also introduced a new gaming chip for China that complies with new rules.

Huawei is the new focal point!

While Nvidia plans some effective changes to enhance its business growth in China, some Chinese firms are reportedly pushing back and don’t want to invest in downgraded Nvidia chips. Eventually, these native companies are turning to Huawei and other Chinese brands in favor of U.S. sanctions.

One such example is the Baidu company, which placed an order for around 1600 Huawei Ascend 901B AI chipsets to exit Nvidia. Probably, Huawei offers better value and quality over those products that the US limitations are allowing Nvidia to sell in the Chinese market.

It would be worth seeing if Nvidia will be able to achieve new milestones in this segment or Huawei will continue to remain a focal point for Chinese firms in terms of AI chip suppliers.

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