In the ongoing geopolitical rivalry between China and the United States over advanced technology, Huawei remains a focal point. The Chinese telecommunications company is a primary target of a U.S. trade blacklist and various controls aimed at preventing Chinese firms from acquiring or producing advanced computer chips, which are deemed crucial for both consumer electronics and military advancements.
Despite these challenges, Huawei is striving to demonstrate resilience against U.S. trade barriers. Last year, the company launched the Mate 60 smartphone series, featuring chips that surpassed previous Chinese capabilities.
However, the recent release of Huawei's Mate 70 series suggests limited progress in chip technology over the past year. An analysis by TechInsights indicates that the chips in the Mate 70 models were manufactured using similar processes as those in the Mate 60, according to analyst Alexandra Noguera.
Noguera's team found that the chips were produced by Semiconductor Manufacturing International Corporation (SMIC), China's leading chipmaker. The analysis revealed that the dimensions of the chips matched those from previous years, indicating a stagnation in technological advancement.
SMIC's status as the sole Chinese manufacturer capable of producing such chips highlights the impact of U.S. restrictions, which appear to be hindering advancements in chip technology. Gregory C. Allen, a technology expert, noted that the export controls have primarily made it challenging for SMIC to enhance its production capacity rather than reversing China's progress.
The Chinese government has prioritized the development of its chip industry, investing billions to expand manufacturing capabilities. SMIC has rapidly constructed factories and has become one of the largest contract chipmakers globally, producing chips designed by clients like Huawei.
U.S. officials have tightened restrictions on SMIC by limiting access to advanced chip-making tools from other nations, including the Netherlands and Japan. Consequently, SMIC relies on outdated machinery, producing its most advanced chips using processes that were established by Taiwan Semiconductor Manufacturing Company in 2018.
According to Noguera, the lack of more advanced chips in Huawei's latest devices is likely due to SMIC's inability to produce them at scale. She stated, "If they could, they would have."
Huawei's devices have gained significant popularity in China, with sales outpacing other brands over the past year. However, the company's commercial success will depend on securing a reliable chip supply from SMIC, which is reportedly operating at the limits of its outdated technology, leading to a high rate of defective chips.
In an effort to further impede SMIC's progress, the Biden administration recently announced expanded restrictions on advanced technology exports to China, adding over 100 Chinese companies to a restricted trade list.
Since the launch of the Mate 60 Pro, Huawei has begun to challenge Apple's long-standing dominance in the Chinese smartphone market. In 2022, iPhones accounted for three-quarters of high-end smartphone sales in China, but that figure has dropped to about half this year, with Huawei's market share more than doubling.
Experts note that while both SMIC and Huawei have been affected by U.S. restrictions, Beijing's primary concern is whether SMIC can deliver the necessary technology for China's needs, rather than its profitability or yield rates.