Despite facing restrictions from the United States on providing advanced chip technology to China, Huawei successfully developed a more potent chip for its Mate 60 Pro smartphone by leveraging technology from American companies.
Utilization of US Technology by Huawei and SMIC
An earlier report highlighted SMIC's utilization of ASML's technology in the past. Recent reports from Bloomberg reveal that Huawei, in collaboration with its chip manufacturing partner SMIC, incorporated technology from Applied Materials and Lam Research, both based in California, to craft a 7-nanometer chip. While not the most cutting-edge chip in existence, it outperforms what the US had intended for its rival in the ongoing chip conflict. This development follows a previous Bloomberg report from October 2023, which mentioned SMIC using ASML's technology for a different advanced Huawei chip.
Acquisition of US Technology by SMIC
SMIC purportedly acquired the US technology before the US Department of Commerce enforced a ban in October 2022. This ban aimed to prevent US companies from supplying advanced chipmaking equipment and chips to Chinese entities. Subsequent restrictions in November 2022 further hindered equipment sales approvals to Huawei and other Chinese firms, citing national security reasons.
Impact on Market Demand
Although there is no conclusive evidence from the US Commerce Department regarding SMIC's mass production of these advanced chips, Huawei witnessed robust initial demand for its Mate 60 series in the first six weeks of 2024. Concurrently, Apple experienced a notable 24% decline in iPhone sales in China during the same period, while overall smartphone sales in China decreased by 7%.
