Huawei takes action to counter the forthcoming US ban on chips

Reuters reported on Thursday, citing informed sources, that Huawei is gradually shifting the production of the chips, which it designs itself away from the Taiwan semiconductor manufacturer TSMC, to a Chinese company in the mainland, in preparation for more US restrictions.

The move towards SMIC - based in Shanghai - comes as Washington prepares to impose new rules requiring foreign companies that use American chipmaking equipment to obtain a license before supplying Huawei, which would directly affect TSMC. It also highlights how the US restrictions imposed on Huawei can act as an incentive for Chinese companies to accelerate the development of domestic technology.

The US government claims that Huawei - the world's largest telecommunications equipment maker and smartphone maker - poses a threat to national security, by using Beijing's espionage equipment, and has blocked US companies from selling to the Chinese company without a license. Huawei has repeatedly denied that its products pose a security threat.

A Reuters source said: "Huawei's HiSilicon chip production unit started to guide some of its engineers toward SMIC design instead of TSMC in late 2019."

In a statement to Rutzer, a Huawei spokesman described the transformation as a "common industrial practice." He said: “Huawei is carefully studying issues, such as capacity, technology, and delivery when selecting semiconductor manufacturing plants.”

It should be noted that no one can manufacture the latest Kirin processors from HiSilicon - which are used exclusively in Huawei mobile phones - except TSMC at the moment, however, experts say that SMIC can be used to produce previous Kirin processors.

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