Huawei’s breakthrough in making an advanced chip underscores China’s determination and capacity to fight against U.S. sanctions. Still, the efforts are likely very costly and could prompt Washington to tighten curbs on the Chinese tech giant’s growth. The company’s ability to produce the component is a vital part of its strategy for becoming a global leader in the fast-growing 5G mobile phone network and other emerging technologies, such as self-driving cars, artificial intelligence, and robotics, which will all require new types of faster, more brilliant pipes for moving massive amounts of data.
The company, founded by Ren Zhengfei in 1987, is one of China’s largest technology-based companies and a key source of national pride. It is headquartered in Shenzhen, a city established as a free-trade zone opposite Hong Kong in 1979. It has grown into one of the world’s fastest-growing telecommunications equipment producers.
Despite its success, Huawei faces various concerns in the United States and elsewhere over suspicions that the Chinese government could use its products for spying. The company denies the allegations, but some governments have banned the sale of its devices or restricted their use in their networks.
China has fought against the accusations, promoting its own technology to catch up and potentially surpass Western firms in areas such as smartphone sales and high-speed Internet access. It has also launched a campaign to boost domestic demand, which has helped it avoid some of the financial pain caused by the global smartphone slowdown.
This week, the Commerce Department announced additional restrictions on Huawei, adding 38 affiliates in 21 countries to an economic blocklist and imposing export-control rules that make it harder for them to acquire chips and other vital components. The rules are similar to the restrictions the Biden administration unveiled in May. Still, they include a more strict definition of what counts as “procurement” and close loopholes that Huawei explored after those measures were put in place.
Those added rules, which take effect Sept. 15, will make it more difficult for semiconductor firms to ship to Huawei. A senior Commerce Department official said that this software creates blueprints for chips and the equipment needed to turn those designs into physical chips. Almost all chip companies, including those in China, rely on the services of U.S.-based companies such as Cadence Design Systems Inc. and Synopsys Inc. to develop their software and equipment from firms such as Applied Materials Inc. and Lam Research Corp. that are used to make the actual chips. The official said those companies will be required to apply for licenses to continue working with Huawei. That could impact many major Asian and European chip makers, including Taiwan Semiconductor Manufacturing International Corp. and MediaTek Inc., as well as some smaller ones, such as NXP Semiconductors NV and STMicroelectronics NV.
