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Huawei reportedly bets on Shanghai chip plant to overcome US trade ban

Huawei might have a way to avoid some of the worst consequences of tightening US trade restrictions, provided it’s willing to be patient. Financial Times sources claim Huawei is planning a dedicated chip factory in Shanghai that would make parts for its core telecom infrastructure business. It would be run by a partner, the city-backed Shanghai IC R&D Center, and would be considered experimental until it’s ready to make chips Huawei can use.

The fabrication facility is expected to start with the manufacture of low-end 45nm chips, the paper said on Sunday, citing people familiar with the project. Huawei aims to make 28nm chips for “Internet of things” devices by the end of 2021, and produce 20nm chips for 5G telecom equipment by late 2022, the report said.

Huawei has no experience in fabricating chips and the plant would be run by Shanghai IC R&D Center, a research company backed by the city’s government, according to the report.

China has laid out a path toward greater economic self-sufficiency in its new five-year plans, and vowed to build its own core technology, saying it can’t rely on buying it from elsewhere.

Huawei might not have to worry about its long-term future if reports are accurate. As you may have noticed, though, there’s no mention of phones in this plan. Mobile devices need highly advanced chip processes to remain competitive at the high end (the Kirin 9000 in the Mate 40 Pro is a 5nm chip), and the reported Shanghai plans wouldn’t help. Huawei can turn to fabrication allies like SMIC for more modest phone chips, but it’s still likely to scale back its phone offerings once their existing supplies dry up.

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