Huawei has nowhere to run: all suppliers are tied to American technology

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Huawei has nowhere to run: all suppliers are tied to American technology

Less than a month is left before TSMC ships the last batch of HiSilicon processors for Huawei. The week kicked off with the announcement of the US banning the supply of Huawei with any component using US-based technology. The harsh truth is that there are almost no suppliers on the market that do not use such technologies.

huawei_01 (1)
huawei_01 (1)

When it came to TSMC’s ban on cooperation with Huawei, the Chinese company SMIC was mentioned as an alternative, but representatives of the latter quickly made it clear that they were determined to follow the requirements of American law. The release of 14nm processors for the needs of Huawei, which began recently, SMIC will be forced to curtail in these conditions.

Even before it reaches the stage of contract manufacturing of processors, Huawei could face serious problems when trying to bypass the new wave of US sanctions, which prohibits it from receiving any finished semiconductor components. Processors are designed using software from American companies Cadence, Synopsys, and Ansys. Even the German Siemens company Mentor Graphics carries out a significant part of the development in the United States, which automatically excludes it from the list of potential Huawei partners.

Four companies control 90% of the global specialized software market. In China, they have a nominal competitor in the person of Empyrean Software, but the tools it offers are inferior to the solutions of world leaders. Local companies Naura Technology Group and Advanced Micro-Fabrication Equipment Co. are trying to supply equipment for the manufacture of semiconductor components in China, but they also lag far behind American Applied Materials and Lam Research.

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The ASML holding company, which supplies lithographic scanners, is based in Europe, but its components are manufactured in the United States, and the operation of this equipment is based on technologies patented in the same country. Actually, ASML’s ability to influence the development of the Chinese semiconductor industry was already proven at the end of last year, when the company refrained from supplying EUV scanners for the needs of the Chinese company SMIC. In this sense, Huawei should not expect concessions.

There is still a Japanese equipment supplier Tokyo Electron, but it is just as dependent on American technology and components as ASML. Materials and chemicals for the manufacture of semiconductor components are also produced primarily by American companies or using their technologies. Dow DuPont, 3M, Corning – their involvement in the sanctions process may lead to the fact that Huawei will be left without displays for its smartphones.

Finally, the British holding Arm, which develops processor architectures, carries out its core activities in the United States, which cuts off Huawei from supplying any ARM-compatible mobile processors. The transition to alternative processor architectures carries too great infrastructure risks, so the Chinese giant will not be able to overcome its dependence on Arm. CCS Insight believes that in the coming years, Chinese semiconductor companies will not be able to do without components and technologies of American origin, even if huge sums are invested in the development of the national industry.

Chinese media reports about Huawei’s intentions to build a 45nm production line by the end of the year without using American technologies were later denied by company representatives. They objected that they had never heard of the so-called “Tashan Project”, which by its name refers to the battle of 1948, which was of great importance for the course of the Civil War in China.

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