The gradual transfer of Huawei chip manufacturing from the Taiwanese company TSMC to the Chinese company SMIC

The gradual transfer of Huawei chip manufacturing from the Taiwanese company TSMC to the Chinese company SMIC

The gradual transfer of Huawei chip manufacturing from the Taiwanese company TSMC to the Chinese company SMIC

News unit From the official announcement Google services The Play Store, Gmail, maps, search services and other services became available, prompting Huawei executives to integrate new smartphones with the Huawei Mobile Services and AppGallery Store supply; A policy that seems to have been successful. Now, according to news published by knowledgeable sources close to Huawei, the company is looking to gradually hand over the manufacturing of its needed chips to the Chinese company SMIC instead of the Taiwanese company TSMC.

This change is apparently in line with the solutions of Huawei has been taken to face the upcoming US sanctions and prevent possible damage to the company’s supply chain. The outsourcing of the chips to Shanghai-based Semiconductor International, or SMIC, comes as Washington enacts new rules for non-U.S. suppliers that use the country’s chip-making equipment. . According to these rules, it will be necessary to obtain a license to use the manufactured chips before providing them to Huawei. In this way, companies such as Taiwanese manufacturer TSMC will be directly affected as one of Huawei’s business partners.

This decision once again shows that the US restrictions against Huawei can ultimately become a stimulus and incentive for Chinese companies in the path of accelerating and developing domestic technology. The US government claims that Huawei, as the largest manufacturer of telecommunications equipment and a leading manufacturer of smartphones, has put the country’s national security at risk; Because the equipment of this Chinese company can be used by the Beijing government for espionage. Therefore, American companies are prohibited from selling equipment to the Chinese giant without permission. Of course, Huawei has repeatedly rejected the possible security threat in its products.

In this regard, Reuters news agency quoted a news source who was not authorized to speak with the media and did not want to be named, data report that HiSilicon, as a subsidiary of Huawei’s chip manufacturer, has asked some of its engineers to pursue design work at SMIC instead of TSMC since late 2019. According to this source, previously Huawei was willing to work with top-tier manufacturers and SMIC was only in the second link of the supply chain. But now it has directed its human and financial resources to this Chinese company to help them speed up the chip production process. A Huawei spokesperson also called this change a “joint industrial exercise” and told Reuters: “When choosing semiconductor factories, Huawei carefully considers issues such as capacity, technology and component delivery.”

The TSMC company has refused to comment on this matter and similarly to SMIC, it has remained silent about Huawei’s new procedure. Taiwan’s TSMC is the world’s top independent semiconductor manufacturer, and not only does HiSilicon depend on it for its chips, but companies like Qualcomm and Apple also rely on it for the most part.

It is not yet clear to what extent Huawei will increase the supply of its chips by SMIC. This company had previously announced that it is considering South Korean companies along with other Taiwanese and Chinese companies as alternative sources of chip production.

While SMIC is considered as the main alternative to TSMC, it should not be forgotten that it is far away from the Taiwanese manufacturer in terms of expertise and technology, and the US authorities have already taken measures to prevent The Chinese company has acquired the most advanced chip manufacturing equipment. TSMC does not disclose the percentage of each customer’s purchases of its total revenue, but analysts have estimated that Huawei accounted for about 13 to 15 percent of the Taiwanese company’s sales as of late 2019. According to them, the rotation of the chip supply route to SMIC will probably reduce this amount by only 1-3%.

According to (Gu Wenjun), senior analyst at ICWise consulting firm in Shanghai, “Currently, there is a significant gap in terms of skills, stability and reliability between TSMC and SMIC” and therefore cannot be a domestic manufacturer. considered China as an immediate replacement for TSMC. For example, while TSMC is looking to complete the design and manufacturing of the processing chipset with 5nm technology and then 3nm, SMIC has started the mass production of 14nm lithography chips in the third quarter of 2019. The architecture that TSMC designed and presented its processors based on several years ago.

From the point of view of experts in this field, the latest Kirin processors that are exclusively used in smart products Huawei are used, currently they can only be manufactured by TSMC, although the manufacture of older Kirin processors can be outsourced to SMIC. In addition, Huawei could outsource the manufacturing of other HiSilicon processors to SMIC, including chips related to the Internet of Things (IoT), energy management devices and digital TV receivers (or set-top boxes).

Of course, mobile industry analysts believe that transferring a larger part of Huawei’s global business to SMIC, on the one hand, will cause SMIC to improve its processes, and on the other hand, Huawei can benefit from knowledge. Use the value gained in cooperation with TSMC in a better way.

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