The United States and its allies have imposed harsh sanctions on the Chinese telecom giant Huawei, which is supported by the Chinese government. This has put the company in a greater predicament in designing and manufacturing advanced chips for artificial intelligence (AI) and smartphones, directly leading to further lagging behind in chip technology by the Chinese Communist Party. Overseas media analysis indicates that its chip technology will lag behind by three generations by 2025.
According to Bloomberg on Tuesday (November 19), in order to compete with Nvidia, Huawei is designing a new generation of two Ascend processors. However, due to the US sanctions, Huawei’s chip manufacturing partners are unable to access the equipment needed to produce the most advanced chips. As a result, Huawei’s new chips can only use the outdated 7-nanometer architecture seen by the market.
The latest chip manufacturing equipment produced by ASML in the Netherlands, the extreme ultraviolet (EUV) lithography machine, can be used to produce the world’s most advanced 2-nanometer or more advanced process chips. ASML has never been allowed to sell this chip manufacturing equipment to China due to national security concerns.
In September, the Dutch government tightened exports of deep ultraviolet (DUV) lithography machines to China, which are older models from ASML. Before this, the Chinese Communist Party had been relying on DUV lithography systems to advance its chip manufacturing technology.
It is reported that Huawei’s main production partner, SMIC (Semiconductor Manufacturing International Corporation), is facing significant difficulties even in stabilizing the production of 7-nanometer chips.
Bloomberg cited another source familiar with the matter stating that SMIC’s 7-nanometer production line is troubled by low yields and reliability issues.
The source added that in the coming years, it is uncertain whether Huawei will be able to obtain a sufficient supply of smartphone processors and AI chips.
This technological limitation means that at least until 2026, Huawei’s core chip technology will remain at an outdated level. One insider mentioned that Huawei’s Mate series smartphone processors are facing similar restrictions.
Bloomberg points out that Huawei’s stagnation not only affects its business, but also has broader implications for China’s artificial intelligence (AI) development goals. The predicament of Huawei indicates that China will fall further behind the United States by 2025. TSMC, which manufactures chips for Apple and Nvidia, will begin producing 2-nanometer chips at that time, leading the technology ahead of China by three generations.
Representatives from Huawei and SMIC did not respond to Bloomberg’s request for comments.
In recent years, despite China’s heavy investment and support for Huawei in chip technology development, the Shenzhen-based company is still struggling. The harsh sanctions from the United States and its allies have made its path difficult.
In 2023, Huawei and SMIC used technology from Applied Materials Inc and Lam Research Corp in California to develop an advanced 7-nanometer chip for Huawei, which was used in the launch of the new Mate 60 Pro smartphone in August last year.
The Biden administration subsequently restricted China from purchasing cutting-edge equipment from US suppliers, including Applied Materials Inc and Lam Research Corp, as well as limiting the purchase of Nvidia’s most powerful AI chips. These chips are highly sought after by major tech companies and governments worldwide.
One sign of Huawei’s dilemma is the ambiguity surrounding the processors to be featured in its flagship smartphones set to be launched in 2024. The launch of these new phones is expected to be delayed compared to the Mate 60 Pro.
Huawei is set to launch the new Mate 70 series on November 26. However, when it began accepting orders this week, there was no grand promotion of the hardware specifications. In recent months, Huawei has shifted its focus to promoting the progress of its Harmony operating system.