In May 2019, Huawei was placed on the US Entity List, which it remains on today. The United States pointed to security as the reason it placed the company on the list that prevents it from accessing its US supply chain, including Google. Exactly a year later, the United States changed its export rules, preventing foundries using American technology to produce chips from sending cutting-edge chips to Huawei.
As a result, Huawei can’t even get its own Kirin chips designed by its HiSilicon unit. At one time, Huawei was TSMC’s second largest customer after Apple. For its latest two flagship series, the photography-optimized P50 lineup in 2021 and this year’s Mate 50 lineup, Huawei has been given permission to use Qualcomm’s high-end SoCs designed not to work with 5G. .
A new report from analytics firm Counterpoint Research says that, based on its calculations, Huawei has exhausted all its in-house chips. In its Smartphone Application Processor (AP) Market Share Report, Counterpoint states:According to our checks and sales data, Huawei has exhausted its stock of HiSilicon chips“.
In the third quarter of this year, HiSilicon’s share of the smartphone AP market was 0%. That’s a sequential decline from the 0.4% share it had in the previous quarter and the 3% share it had in the third quarter of last year. The main designers of AP chips for smartphones are MediaTek, Qualcomm and Apple.
In October, the Financial Times reported that Huawei was considering redesigning its smartphones to use less advanced chips produced by Chinese foundries. China’s largest foundry is SMIC and while it was able to produce chips using its 7nm process node, these chips were for cryptocurrency mining and were not complex enough to drive a smartphone. SMIC and other Chinese foundries will produce 14nm chips at best, a far cry from the cutting-edge 3nm chips that TSMC and Samsung Foundry will ship next year.
This means that while Huawei is able to offer 5G connectivity on its new smartphones if it uses chips made in China, its smartphones will not be as fast as the competition. This is because the higher the process node, the lower the number of transistors in these chips. And with fewer transistors, the chips will be less powerful and less energy efficient. The last time the iPhone was equipped with a 14nm chip was in 2015, when the Samsung version of the A9 chip was used in some iPhone 6s and iPhone 6s Plus models. .
Huawei has done an incredible job designing its own HarmonyOS operating system (which is in its third version) and replacing the Google Mobile Services ecosystem with its own Huawei Mobile Services. But since Huawei won’t be able to find a foundry capable of producing cutting-edge chips without using US technology, the export rule change is Huawei’s biggest problem at this point.
Huawei’s EUV patent could be a game-changer
The United States has also worked with the Netherlands to prevent the export to China of important extreme ultraviolet (EUV) lithography machines. Mostly made by a Dutch company called ASML, these school bus-sized machines cost $150 million each and are used to etch circuit patterns larger than fins than a human hair onto silicon wafers. These patterns must be extremely fine for billions of transistors to fit into a chip.
Last month, a senior Dutch official said that the Netherlands will have to defend its economic interests. In other words, they may soon have to allow ASML to export EUV machines to China instead of giving up the economic impact of allowing these machines to be shipped to China. This if allowed, we must see Chinese foundries like SMIC make an effort to develop cutting-edge AP chips for smartphones.
But, Huawei might not have to rely on ASML. Last month, the company was granted a patent allowing it to create its own EUV machine that can be used to manufacture chips using a 7nm process node and below. If Huawei can make an EUV machine without using US patents, it will have a good chance of bringing its Kirin chips back to market.