In the heart of the US-China tech war, Huawei, a leading Chinese semiconductor company deeply tied to the Chinese Communist Party, is facing increasingly narrow prospects under the growing influence of Western sanctions, distancing itself further from international advanced levels.
As a leading domestic chip manufacturer in China, Huawei, which is deeply integrated with the Chinese Communist Party, periodically launches so-called domestic brands as part of political missions but each time it triggers further sanctions from the United States, making Huawei’s path narrower.
In June this year, Huawei announced the availability of the latest processor samples for the Ascend 910C, which competes with the US-based Nvidia H100 AI chip.
In October, it was discovered that Huawei’s AI accelerator Ascend 910B was using TSMC’s 7nm chips, and under the US Department of Commerce’s directive, TSMC halted sales of AI application 7nm and more advanced process chips to mainland Chinese customers on November 11. Two days later, the US also called on Samsung, Intel, and others to comply simultaneously. Samsung’s proportion of 7nm and below process Chinese customers is significantly higher than TSMC’s, accounting for about 30%.
In a letter on November 4, Michael McCaul, chairman of the House Foreign Affairs Committee, urged the US Department of Commerce to investigate whether SMIC was illegally producing chips for Huawei. On November 7, the House Committee on the Chinese Communist Party sent letters to several semiconductor manufacturers in the United States requesting detailed information on sales volume and major customers.
Last year, Huawei launched its flagship Mate 60 Pro smartphone, claiming to use a self-produced 7nm Kirin 9000S chip. This move increased the determination of US sanctions, and shortly afterward, the US and the Netherlands restricted the export of older deep ultraviolet lithography machines 1970i and 1980i, which use multiple exposures and can achieve advanced process capabilities.
Despite the official propaganda from the Chinese Communist Party claiming that US chip bans on Huawei can stimulate the development of the domestic chip industry, in reality, due to US sanctions, Huawei’s latest chips will stay at the outdated 7nm architectural technology level at least until 2026. By then, TSMC will start producing 2nm chips, leaving Huawei’s chips three generations behind.
Furthermore, the 7nm production line of SMIC is plagued by low yields and reliability issues, unable to ensure commercial viability, leading to increasing production losses.
Huawei needs tens of millions of Kirin processors annually for its smartphones and plans to produce hundreds of thousands of Ascend AI chips. In the coming years, Huawei’s demand cannot be met.
According to Bloomberg, Huawei and its partners have been trying to push the limits of ASML’s old deep ultraviolet lithography machines by conducting up to four exposures on silicon wafers, with a total error margin not exceeding one percent of the diameter of a hair. This not only consumes resources but also increases the risk of misalignment and yield loss.
“Multiple exposures fundamentally introduce more process steps, thereby increasing the risks of defects and variability,” an analyst said. “In addition, the complexity and high cost of multiple exposures make it less economically feasible for mass production at advanced nodes such as 5nm.”
Bloomberg also mentioned that Beijing hopes local chip manufacturers will deploy more machines from domestic suppliers to stimulate the domestic ecosystem. However, due to the poor quality of domestically produced equipment used in conjunction with ASML’s DUV system, this effort has not progressed smoothly.
Brad Liao, a senior manager in Taiwan’s IC design industry, told Dajiyuan that SMIC’s 7nm technology has very low yields, so Huawei was forced to secretly use other companies in mainland China as fronts to place orders with TSMC for wafer manufacturing.
He explained that SMIC’s 7nm technology uses multiple exposures to bypass US EUV machine restrictions, with a yield of only around forty percent, making Huawei very distressed. The testing costs after production are also very high. No normal company would consider using this technology for production.
Liao noted that the design of any advanced semiconductor chip, such as below 7nm, requires a significant amount of manpower, money, and time in the early stages. The design must be completed before handing it over to a foundry like TSMC for production. Then, after the chips are produced, a complete system must be built, such as an AI server system, which incurs a huge amount of manpower, money, and time. Today, with TSMC halting chip production, Huawei’s development in self-owned AI has suffered a major blow, with massive manpower, money, and time costs instantly reduced to zero, leaving Huawei in tears.
“Some may ask, will Huawei set up another company overseas and place orders with TSMC again? I don’t think so because this behavior will be caught again, and Huawei’s massive investment will be reduced to zero once more.”
Another signal of Huawei’s deepening crisis is that unlike last year when Huawei boasted about using the self-produced 7nm Kirin 9000S chip in its flagship smartphone Mate 60 Pro, the processor for Huawei’s next-generation Mate 70 Pro, scheduled to be released on November 26, has not been disclosed.
Over the past few months, Huawei has been touting its HarmonyOS mobile operating system. However, technical experts say that introducing such a new mobile operating system is a foolish move as it is unlikely to establish a commercial ecosystem.
So far, Apple’s iPhones have evolved to 3nm processors since the iPhone 15 in 2023, leaving Huawei’s smartphone chips far behind.
Mainland media believes that the Mate 70 Pro may be equipped with the Kirin 9100 chipset, but the nanometer process is undisclosed. Since 5nm cannot be mass-produced, foreign media estimates that the Kirin 9100 may be using an improved 6nm lithography technique.
Market analysts in mainland China pointed out that although the technical configuration of the Mate 70 Pro is attractive, its performance is not top-notch compared to other high-end Android smartphones in the same price range. The Kirin 9100 chip cannot match the latest Snapdragon 8 in practical use, and its pure HarmonyOS system is difficult to compete with the mature Android and iOS ecosystems.
Brad Liao said, “Huawei currently has difficulty using SMIC’s 7nm technology domestically, and cannot access advanced technologies from other foundries abroad. Huawei can only use SMIC’s outdated technology to produce any products, which is a death knell for many cutting-edge products such as smartphones or AI.”
US economist Davy J. Wong told Dajiyuan that 3nm and 2nm advanced process chips are the core competitiveness of high-end smartphones and future AI devices. Huawei is currently struggling to break through the bottleneck of the 7nm process, which also has low yields. In terms of overall technology gap, the lag in advancement is quite apparent.
He further commented that although Huawei can continue to rely on a closed space in the Chinese market, censoring or imprisoning voices of doubt and promoting itself as a domestic brand, its competitiveness on a global scale is very limited, unable to compete with international brands like Apple and Samsung, mainly used in markets with low demand and information closures in Asia and Africa.
“In the short term, it has low global influence, unable to reverse. In the medium to long term, it will be extremely difficult for Huawei to become a choice in the global high-end market. (US President) Trump’s administration, in terms of chip bans, professional talent, and cooperation with allies, is highly likely to increase pressure on the Chinese chip industry.
Wang Xiuwen, assistant researcher at the PLA Academy of Military Science and Concept Research Institute of National Defense Security Research Institute, told Dajiyuan that the US sanctions against China are effective. Although some AI chips still flow into China through indirect means, overall, it has indeed delayed the progress of China’s advanced technologies such as AI. This is a matter of the survival of US hegemony. After Trump took office, he is likely to increase sanctions on Chinese chips and will not go easy.
Wang Xiuwen pointed out that the gap between the US and China in chips is a “relative” issue, not an “absolute” one.
“Even if China breaks through the 7nm technology, by the time it does, Europe and the United States will have advanced to higher levels. Although Huawei is technologically behind, it has support in the domestic market, but in the future, it may be divided into ‘China domestic’ and ‘China abroad’ with two standards and systems. Therefore, Huawei’s products will gradually lose competitiveness in the global market and will eventually have to market to countries in the ‘global south,’ especially authoritarian regimes.”