Huawei said to build own chip facility in face of US sanctions

It will start with manufacturing 45nm chips that technology companies are using for more than 15 years

Huawei posted a 9.9% rise in revenue in the first nine months of the year. AP

Huawei, the world's second largest smartphone maker, plans to build a chip manufacturing facility in China in a bid to reduce its reliance on American technology and secure semiconductor supplies for its core telecoms business despite US sanctions.

The new plant will not use any American technology in the manufacturing of chips, the Financial Times reported on Sunday.

Huawei will produce semiconductor chips of different sizes for various equipment with the aim of ensuring a regular supply once stocks of imported chips Huawei has been accumulating since last year, are depleted, the newspaper reported.

The new facility will start manufacturing low-end 45 nanometre chips that technology companies are using for more than 15 years. It aims to make advanced 28nm chips that can be used in Internet of Things and smart TVs by the end of 2021.

Huawei will gradually start producing 20nm chips for 5G equipment by late 2022, the report added. However, the planned upcoming factory will not help Huawei’s smartphone business as it needs the more sophisticated 14nm chips.

The company has no prior experience in assembling chips and the new facility will be run by Shanghai IC R&D Centre, a chip research firm supported by the Shanghai Municipal government, according to the report.

Huawei and 114 of its affiliates were placed on a Bureau of Industry and Security entity list for a year in May 2019, banning US companies such as Google and Microsoft from doing business with them. President Donald Trump later extended the ban to 2021.

In August, the US Department of Commerce restricted Huawei’s access to items produced using American technology and added another 38 affiliates of the company to its blacklist.

The order prohibited any foreign semiconductor company from selling chips developed or produced using US software to the Chinese company, without first obtaining a licence to do so.

Washington has similar sanctions in place that restrict the sale of planes that contain American technology or parts. Boeing and Airbus are unable to sell their jets or spare parts to countries facing US sanctions.

In August, Huawei said it was running out of chips due to US trade sanctions and expected the situation to deteriorate by September.

“Huawei has strong abilities in chip design and we are very happy to help a trustworthy supply chain develop its capabilities in chip manufacturing, equipment and materials. Helping them is helping ourselves,” the company’s rotating chairman Guo Ping said in September.

In his keynote at Huawei Connect 2020, Mr Guo said US sanctions had raised “great challenges to our production and operations” and “survival is the goal” in the near term.

“We got the last batch of chipsets in the middle of September. We are still assessing the specific impact,” he added.