Preliminary results of an investigation launched by the US Department of Commerce suggest that China is unable to produce 7nm chips in large quantities. But the respondents Nikkei Asian Review Sources are convinced that Huawei Technologies will launch 60 to 70 million smartphones next year, doubling the current year’s production program, but not all of them will be based on advanced proprietary chips.
Of course, not all Huawei smartphones scheduled for production next year will be 5G-focused and equipped with state-of-the-art processors. Many currently released Huawei smartphones are based on Qualcomm processors with support for 4G networks, but without 5G support. The supply of the latter is prohibited by sanctions, but Qualcomm can supply solutions supporting 4G networks to Huawei subject to a valid export license. Huawei also uses other imported semiconductor components.
However, fearing tightening U.S. sanctions, Huawei earlier this year asked Qualcomm to release all of its chip orders for the year through June, the sources said. Officially, representatives of the American company only noted that Qualcomm does not expect significant income from the sale of components for Huawei’s needs in the third and fourth quarters of this year.
According to Chinese customs authorities and industry association SEMI, cited by the Nikkei Asian Review, China has been the largest buyer of chip-making equipment since 2020 and has been in the top three since 2016. In the first eight months of this year, Chinese companies imported $9.24 billion worth of chip production equipment from the United States, the Netherlands and Japan. For all of last year, this amount was $11.4 billion, but in 2021 it approached a high of $1.5 billion to $14 billion.
According to a former employee of US supplier Applied Materials, the Chinese company SMIC already had a production line capable of producing 7nm chips in 2018 or 2019. It was his presence that gave SMIC and its customers the edge they needed to continue combating the fallout from sanctions imposed by the United States and its allies in the technology sector. The equipment was received from SMIC before it was placed on the US export control list. According to this source, SMIC has been developing technologies to produce 14nm and 7nm chips for many years. From this point of view, it is not surprising that this manufacturer can finally start producing 7nm products.
An official at a Chinese company that specializes in supplying equipment for chip production said in comments to Nikkei that SMIC would be able to produce up to 36 million 7nm products annually if the defect rate continues to fall . For SMIC and Huawei, new US sanctions, which are apparently being prepared by the country’s authorities, could pose a problem in this area.
According to IDC, shipments of Huawei-branded smartphones reached a peak of 240.6 million units in 2019, but last year the company only managed to launch 30.5 million smartphones. In this sense, the plans to double delivery volumes next year seem quite ambitious.