TechInsights, a technology consulting company, recently disassembled Huawei’s new Mate 70 smartphone and found that its chip development has stagnated, even lagging behind the same product from TSMC five years ago. This proves that the Chinese Communist Party’s so-called self-reliance in chips is a political maneuver disregarding economic consequences. Huawei’s patriotic branding has been gradually diminishing in the market.
On December 11th (Wednesday), TechInsights released a new report stating that researchers, after dissecting Huawei’s latest Mate 70 Pro Plus phone, discovered that its built-in Kirin 9020 chip was not thoroughly redesigned but rather incrementally improved based on its predecessor, Kirin 9010.
The Kirin 9020 still utilizes the same 7-nanometer technology as last year, produced by SMIC, but with modifications to the circuit layout.
According to Bloomberg, this indicates that Huawei is still lagging behind industry leader TSMC by about five years in terms of technology. In 2018, TSMC manufactured a 7-nanometer chip for the first time utilizing ASML’s extreme ultraviolet (EUV) lithography technology.
Citing TechInsights analyst Alexandra Noguera, Bloomberg reported that Huawei’s current chip technology is still inferior to what TSMC introduced five years ago. Compared to TSMC’s 7-nanometer chip in 2019, Kirin 9020 is slower, consumes more power, and has lower yield.
In another report at the end of last month, TechInsights pointed out that the performance of the Kirin 9020 processor in the Mate 70 series is inferior to the latest processors from Qualcomm and Apple, affecting its competitiveness in the high-end market.
Bloomberg reported last month that Huawei may not surpass 7-nanometer technology until at least 2026, whereas Taiwan Semiconductor Manufacturing Company and Samsung Electronics may start mass producing 2-nanometer chips next year, potentially putting Huawei’s chip technology behind by three generations.
In June this year, Huawei announced the availability of the latest processor sample “Ascend 910C,” which competes with the American company Nvidia’s 9H100 AI chip. However, Nvidia upgrades its chip technology annually, potentially widening the performance gap between its products and Huawei’s alternative offerings.
Professor Lin Zongnan from the Department of Electrical Engineering at National Taiwan University told Epoch Times that the performance gap between Huawei and high-end smartphones like Apple will continue to widen. Once Taiwan Semiconductor Manufacturing starts mass producing 2-nanometer chips, high-end smartphones will adopt them. In a real-world scenario, the performance gap between Huawei’s previously underwhelming phones and the new competition will become even more evident.
The Chinese Communist Party promotes chip self-sufficiency, yet in reality, the gap between Huawei’s chips and international advanced levels is widening. The performance of Kirin 9020 even falls short of TSMC’s 7-nanometer chip from five years ago. So, why does Huawei continue pursuing these inefficient and economically unbeneficial endeavors?
Lin Zongnan explained that in the private sector, companies without efficiency and economic benefits would not survive for long, as shareholders would not tolerate such operations.
He emphasized that Huawei is not a typical private company; it is backed by the Chinese Communist Party’s military and government entities. Therefore, efficiency and economic benefits are not part of its thought process.
Lin Zongnan argued that the Chinese Communist Party is willing to do whatever it deems important, even if it lacks efficiency and economic benefits. In high-tech fields like semiconductors, it is not just about having plenty of people and money; achieving that level of technology requires more than just resources. While it’s one thing to claim to do something, whether you can actually accomplish it is another matter. It’s important to make leaders understand that they cannot compete with the U.S. under the leadership of the Party leader. The U.S. has its own technology.
“All these actions are essentially political maneuvers,” Lin Zongnan added.
Although Huawei appears to be a private company, it receives more preferential treatment from the Chinese government than the typical state-owned enterprise. Previously, a former communication soldier named Cai informed Epoch Times that all communication equipment used within the Chinese army is provided by Huawei.
Wang Xiuwen, an assistant researcher at the Institute for CCP Politics, Military Affairs, and Operational Concepts of the National Security Research Institute, told Epoch Times that the CCP’s “political logic” triumphs over “economic logic,” as it is willing to go to great lengths to demonstrate, under harsh Western sanctions, its ability to develop its 7-nanometer chips. However, market realities cannot be denied, and the harsh truth is that the Chinese public has less disposable income now, and Huawei phones will ultimately face market forces, especially within China.
Wang Xiuwen believes that the CCP thinks it can replicate the success of the “two bombs, one satellite” experience to achieve chip self-sufficiency, believing that China has the most comprehensive manufacturing capabilities and ecosystem globally and is destined to succeed.
She noted that this is a relative concept rather than an absolute one; the CCP may one day achieve advanced chip self-sufficiency, but by then, Europe and America would have made significant progress. Furthermore, the CCP lacks a cost-benefit mindset, as SMIC has to destroy more defective products than it produces every time a batch of 7-nanometer chips is manufactured. This kind of self-reliance could potentially turn into another failed “Great Leap Forward.”
“The political logic doesn’t always prevail over economic logic,” she said.
In a report at the end of last month, brokerage firm Jefferies stated that the Mate 70 smartphone newly released by Huawei did not perform well in terms of sales in China. Based on online reviews following the release of the Mate 70, people’s enthusiasm for it has significantly decreased.
Recently, a video circulating on social media featured a Huawei retailer named Liang from Shenyang, Liaoning, revealing that their sales for the Huawei Mate 70 series this year have been extremely poor. The reason being that the common people have less money in hand, and the patriotic sentiment tied to Huawei’s products is gradually wearing thin in the market.
In the video, Liang mentioned that buying a Huawei phone is like giving half the price to the country and the “patriotic” sentiment. People have now realized that they can support Huawei but cannot afford to buy a high-priced phone with low specifications every year.
The day after the video was released, Huawei distributors stopped supplying him and Liang was summoned by Huawei’s lawyers, forcing him to delete the video.
Comments from netizens included: “Huawei, as a military enterprise, enjoys treatment within the country surpassing even state-owned enterprises. Many naïve individuals mistakenly believe that Huawei, a private company, is being relentlessly oppressed by the U.S.”
“Why buy a Huawei phone without using your brain? In China, you either buy an Apple phone or a cheap one with basic functions. There’s no need to pay a ‘patriotic IQ tax.'”
“The sales gained through political patriotism will ultimately perish politically.”
Others pointed out, “With half the price of a Huawei phone, you can get a much better Pixel. I don’t know why one would spend money on being monitored. Its performance is inferior to any other brand.”
“The hunger marketing strategy can no longer work, and the product itself is mediocre, coupled with a CPU performance lag of two to three years compared to mainstream chips.”
Another netizen commented, “It’s not about the cost with Huawei. Even if they pay me, I wouldn’t want it. People with basic digital knowledge know that all of Huawei’s products excel in surveillance and monitoring. Using Huawei is synonymous with the instant disappearance of data and information security. It’s more about personal safety than anything else. One cannot afford to be careless.”
Lin Zongnan noted that initially, even ordinary Chinese citizens might support Huawei due to a sense of patriotism. However, as China’s economy faces challenges, people will become more cautious in spending money and will no longer blindly purchase Huawei phones based on a sense of patriotism. Therefore, the future prospects of Huawei phones are dim.
Wang Xiuwen stated that the Chinese people are unwilling to be taken advantage of financially, and Huawei phones may end up being forcibly purchased by government agencies or end up in military use. In the long term, Huawei faces low-priced competition from other Chinese brands in the mid-range consumer phone sector and cannot compete with European and American phones like Apple in the high-end phone sector. This may lead to a situation where Huawei will be caught between a rock and a hard place in the market, unable to boast of being “miles ahead” anymore.