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Huawei Takes Revenge as China Catches Up on Semiconductors

By Peter Elstrom and Mackenzie Hawkins | Bloomberg Businessweek | September 29, 2023

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By the standards of the gadget business, everything about Huawei’s release of its Mate 60 Pro smartphone in late August was unusual. Instead of talking up the device in a splashy marketing event, the company quietly started selling it online. Huawei didn’t even reveal several key technical specifications, yet burned through its inventory in hours. Within China, this inspired a wave of patriotic celebration.

The debut is easier to understand if the Mate 60 Pro is seen less as a mobile device and more as a message from one global superpower to another. Huawei Technologies Co. has been at the center of US attempts to undercut Chinese tech development for years. In 2019 the Trump administration added the company to the so-called Entity List, curtailing its access to US technology and effectively destroying its huge smartphone business. Both the Trump and Biden administrations have since ratcheted up pressure on China’s tech industry, most recently with export controls that the US Department of Commerce outlined in October 2022. The Mate 60 Pro went on sale just as Commerce Secretary Gina Raimondo was visiting China, inspiring memes there such as an image of her giving the phone a thumbs-up with the caption, “Brand Ambassador of Huawei.”

The reason Chinese nationalists saw the phone as such a blow to Raimondo and the US was its main processor, a component designed and manufactured in China that uses 7-nanometer chip technology. The Mate 60’s Kirin chip isn’t as advanced as the 3nm chips that power Apple Inc.’s most advanced new iPhones. But the export controls were aimed at keeping China’s tech capabilities 8 to 10 years behind the US, and the phone demonstrated that Huawei’s chipmaking partner, Shanghai’s Semiconductor Manufacturing International Corp (SMIC), may be only four years behind. 

By showing it can make its own devices using domestically produced semiconductors, China is trying to signal that US efforts to maintain its superiority are faltering.  Ultimately the struggle isn’t about smartphones but over strategically important applications such as artificial intelligence and supercomputing, including for military technology.

The situation remains complicated for both Beijing and Washington. In China, the US sanctions are seen as a continuing threat. In the US, concerns are mounting that its policies are actively backfiring. Several key US allies remain ambivalent about joining the US efforts to isolate the world’s second-largest economy.

3 key takeaways from the article

1. Huawei’s release of its Mate 60 Pro smartphone in late August is seen less as a mobile device and more as a message from one global superpower to another.
2. The reason Chinese nationalists saw the phone as such a blow to US was its main processor, a component designed and manufactured in China that uses 7-nanometer chip technology. The Mate 60’s Kirin chip isn’t as advanced as the 3nm chips that power Apple Inc.’s most advanced new iPhones. But the export controls were aimed at keeping China’s tech capabilities 8 to 10 years behind the US which appears now may be only four years behind. 
3. By showing it can make its own devices using domestically produced semiconductors, China is trying to signal that US efforts to maintain its superiority are faltering.

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(Copyright lies with the publisher)

Topics:  Technology, Semi-conductor, China, Globalization, USA