- Eric Xu, the rotating chairman at Huawei, believes that U.S. sanctions will lead to a "rebirth" of China's chip industry.
- The United States has implemented sanctions and export controls over the last several years in an effort to isolate China and Chinese companies.
- Huawei, along with other domestic businesses, has produced electronic chip design tools for manufacturing semiconductors with sizes of 14 nanometers and up, according to Xu.
On Friday, a senior executive at Huawei announced that the chip industry in China will experience a "rebirth" due to U.S. sanctions, as the Chinese telecoms behemoth announced a breakthrough in semiconductor design technology.
In response to Washington's tech export restrictions on China, Eric Xu, Huawei's rotating chairman, made bold statements.
Xu stated during a press conference that China's semiconductor industry would not remain passive and would instead focus on self-strengthening and self-reliance.
"We will provide our backing to all endeavors by the Chinese semiconductor industry towards self-saving, self-strengthening, and self-reliance”.
In the wider battle for technological dominance between the United States and China, semiconductors have become a contentious issue. The U.S. government has been attempting to break ties with China and Chinese firms by enforcing sanctions and limitations on exports in recent years.
In 2019, Huawei was added to the Entity List by the U.S., preventing American firms from selling technology to the Chinese company, including chips for 5G products. The limitations on chips for Huawei were further strengthened in 2020, leaving the firm unable to obtain the latest cutting-edge chips required for their smartphones.
The U.S. government introduced wider chip restrictions in the previous year to prevent Chinese firms from accessing essential semiconductors that could be utilized for artificial intelligence and other advanced applications.
Concerns have been raised by the United States that China might use advanced semiconductors for military applications.
Xu stated that these advancements may actually benefit China's local semiconductor industry, rather than hinder it.
"I am confident that China's semiconductor industry will be revitalized by these sanctions and will emerge as a robust and self-reliant industry", Xu said.
As per experts, the latest set of U.S. restrictions is likely to have an adverse impact on China's semiconductor sector. Certain tools or chips created using American technology are prohibited from being exported to China under the current regulations.
The effectiveness of this approach is due to the nature of the chip supply chain, where U.S. tools are employed throughout the entire chip production process, regardless of whether the semiconductor is produced in another country.
The Chinese semiconductor sector heavily depends on foreign technology and does not have companies that can compete with the skills of firms in the United States, Taiwan, Japan, and South Korea.
Amid the tech rivalry with the U.S., China has prioritized self-reliance, but experts believe it will be a highly challenging endeavor.
Chinese enterprises are presently attempting to domestically produce the tools essential for manufacturing semiconductors.
In a recent speech reported by Chinese media, Xu mentioned that Huawei and other domestic enterprises had cooperated in devising electronic chip design tools necessary for producing semiconductors with a size of 14 nanometers or more. Xu further stated that the tools would undergo verification this year, which would enable their deployment.
The chairman acknowledged his statement regarding the development of chip design tools domestically, but clarified that it would not significantly affect Huawei's operations. He explained that the development only indicates that Chinese firms now have the design tools needed domestically.
According to Xu, the 14-nanometer figure refers to the size of an individual transistor on a chip, with smaller transistors potentially resulting in more powerful and efficient semiconductors.
Huawei is facing difficulties in obtaining chips with a smaller nanometer size suitable for more advanced applications, as the ones domestically developed are not sufficient for its needs. The company is still struggling with the impact of U.S. sanctions, with a 69% year-on-year drop in net profit in 2022, which is the largest decline on record.
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