Huawei tries to create a new chip supply chain in China

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According Nikkei AsiaHuawei is quietly setting up a new supply chain manufacturing across China in an attempt to survive US repression.

Huawei restarts chip production in China

The Chinese company wants to double its chip production over the next two years. Unable to buy semiconductors abroad, Huawei decided to make them. From Beijing to Shenzhen, its home port, Huawei is trying to fundamentally transform the supply chain in China. Until a few years ago, the company used to design its own chips and have them manufactured in Taiwan or elsewhere. Today, because of US export sanctions, this is no longer possible.

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In the southeast Chinese port city of Quanzhou, a near-abandoned factory, hit by US sanctions four years ago, has quietly come back to life. Fujian Jinhua Integrated Circuit Co (JHICC), a chipmaker, had to suspend its activities after the United States accused him of stealing trade secrets at the end of 2018. A few months ago, the company gradually restarted production with the appearance of a new customer. Engineers and workers hired by Huawei took over the factory.

Right across from this gigantic factory, Quliang Electronics, a chip packaging service provider, is building a second production site in order to meet the growing demand of this same customer: Huawei. This new supply chain is currently much smaller than it was before it was hit by US sanctions. Before 2020, Huawei was much more powerful than today. However, the company never give up and do everything to survive.

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As Huawei grew, Washington grew alarmed at the company’s alleged ties to the Chinese military, which the company has long denied. The sanctions announced in 2020 by the Trump administration prevented him from continuing this momentum. The company has proven resilienteven thwarting certain predictions that estimated that she would not resist.

JHICC and Quliang are just two examples of Huawei’s domestic supply chain ambitions. With the help of local governments across China, Huawei and its partners are working to establish a new chip production and assembly network in Beijing, Wuhan, Qingdao and Shenzhen, Huawei’s home base, with investments estimated at more than 400 billion yuan ($55.8 billion). The objective is simple: to replace foreign manufacturers and suppliers.

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