On the evening of August 17, the US sanctions against Huawei’s “chip” business escalated again. This time, Huawei’s path to find third-party manufacturers to purchase chips was also restricted.
This is the latest revision of the US Department of Commerce based on the ban issued in May of this year, and it can also be seen as an "interpretation" after waiting for three months. According to the latest statement of the US Department of Commerce, this amendment further restricts Huawei's ability to purchase foreign-produced chips made using US technology.
Purchasing third-party chips also requires U.S. approval
"The new rules clearly stipulate that any use of US software or US-made equipment is prohibited and requires permission." US Secretary of Commerce Wilbur Ross said in an interview with Fox Business that restrictions were imposed on Huawei-designed chips in May. , But Huawei "is taking circumvention measures through third parties."
This time, the US Department of Commerce has added some new rules. For example, products based on US software and technology cannot be used to manufacture or develop any parts, components, or equipment produced, purchased, or ordered by any Huawei subsidiary (in the entity list). Huawei in the entity list must obtain permission to participate in relevant transactions as a "buyer", "intermediate consignee", "ultimate consignee" or "end user".
The US Department of Commerce also included Huawei’s 38 affiliated subsidiaries in 21 countries on its “Entity List”. No company is allowed to export US technology to the entities on the list without a license, most of which are Huawei Cloud services. Related companies, including Huawei Cloud Beijing, Huawei Cloud Dalian, and Huawei's research institutions in many countries.
On May 15 this year, the United States further strengthened restrictions on Huawei's use of American semiconductor technology on the basis of including Huawei on the entity list. Under the new ban, any company that supplies semiconductor products containing US technology to Huawei must first obtain an export license from the US government. In other words, without the consent of the United States, Huawei and its affiliates will not be able to use American software and technology to design chips, nor can they use American equipment to produce chips.
The ban took effect on the same day, but provided a 120-day buffer period, and the 60-day period from May 15 to July 14 is in the regulatory interpretation period. During these 60 days, all suppliers, including TSMC, Samsung and SMIC, can also submit their opinions to the US Department of Commerce.
At that time, many parties in the industry were waiting for the US to further explain the regulations. During the period, Huawei also released low-key performance for the first half of 2020, which was half a month earlier than previous times.
Performance data shows that in the first half of this year, Huawei achieved sales revenue of 454 billion yuan, a year-on-year increase of 13.1%, and a net profit margin of 9.2%. Among them, operator business revenue was 159.6 billion yuan, corporate business revenue was 36.3 billion yuan, and consumer business revenue was 255.8 billion yuan. Maintaining double-digit revenue growth under the dual impact of the epidemic + US sanctions is undoubtedly a happy achievement.
But this round of sanctions strikes in full, but it makes people worry about Huawei's future.
Huawei rescues itself hard
In the past three months, rumors about Huawei's search for solutions in the industry chain followed one after another.
For example, Huawei urgently adds 700 million US dollars to TSMC; negotiate with Samsung to see if it can produce 5G chips for Huawei; find third-party chip suppliers to discuss with MediaTek and Ziguang Zhanrui. According to reports, Huawei has purchased more chips from MediaTek. It has risen by 300% in the past... It is even rumored that Huawei wants to build its own wafer fab, promote the construction of a 28-nanometer de-beautifying chip production line, and build its own EDA software R&D team.
But the possibility of self-built fabs is very small. Some industry analysts told InfoQ that this method is "too slow." Huawei must first ensure that upstream components can be purchased and products can be sold. These two points are enough.
Cooperation with MediaTek is considered to be one of the most effective solutions. Huawei’s rotating chairman Xu Zhijun said in April this year that if the United States does this (chip foundry is banned), the company can still buy chips from South Korea’s Samsung, Taiwan’s MediaTek, and China’s Spreadtrum Communications. Even if Huawei has made sacrifices because it has not been able to produce chips for a long time, I believe that many chip companies will grow up in mainland China.
But now it seems that Huawei can't even count on this P lan B. Under US sanctions, how can Huawei's chip path go?
"Huawei's Q4 to next year's Q1 should be a dark period." The above-mentioned analysts said that how Huawei is affected depends on the specifications of Huawei's new-generation Kirin chips in September.
At present, many aspects of chip design and production still need to rely on technology provided by American companies. In addition to the well-known TSMC manufacturing, current advanced chips will use EDA (electronic design automation) software from American manufacturers Synopsys and Cadence. These two American companies have more than 50% of the EDA market share.
On August 7, at the 2020 Summit of the China Information Technology 100, Huawei’s consumer business CEO Yu Chengdong said that due to US sanctions, Huawei’s global leading Kirin high-end chips cannot be manufactured after September 15 and will become a swan song.
"Unfortunately, in terms of semiconductor manufacturing, (Huawei) only did chip design, not chip manufacturing." He said that the Mate 40, which will be launched this fall, may be Huawei's last generation of high-end mobile phones equipped with self-developed chips.