Caixin
May 17, 2019 08:19 PM
BUSINESS & TECH

Huawei Unit Says It Can Help Ensure Chip Supply Without U.S. Tech, Amid Doubts

Huawei is facing its “darkest moment,” wrote He Tingbo, chief executive of HiSilicon Technologies Co. Ltd. Photo: VCG
Huawei is facing its “darkest moment,” wrote He Tingbo, chief executive of HiSilicon Technologies Co. Ltd. Photo: VCG

Huawei Technologies Co. Ltd. has been developing its own chips for years in anticipation of an “extreme scenario” in which the U.S. government cuts off access to American technology, an executive at the Chinese telecom company’s chip-making arm said Friday.

All of the contingency plans that Huawei has been working on over the years will be put into use “overnight,” said He Tingbo, chief executive of HiSilicon Technologies Co. Ltd., in an internal memo to employees dated “early hours of Friday.”

The release of letter — widely circulated among Chinese media — came shortly after the U.S. officially placed Huawei on a blacklist that will ban the company from buying U.S. technology without special approval. That announcement came one day after the U.S. Department of Commerce, citing potential risk to U.S. national security, said it has put Huawei onto a so-called “Entity List,” a preliminary step to blacklist the company.

In the letter, He called the Commerce Department’s action the “most insane” that has ever been undertaken by a superpower to “cut off global cooperation in the technological and industrial system.”

Huawei is facing its “darkest moment,” she wrote.

However, she went on to say that HiSilicon’s efforts will help ensure that Huawei has a “continuing supply of most of its products” and will guarantee its “strategic security.”

One of more than 60 Huawei subsidiaries, HiSilicon was established more than 20 years ago. In addition to Huawei, HiSilicon also supplies chips to other companies, such as Chinese surveillance-equipment maker Hangzhou Hikvision Digital Technology Co. Ltd.

HiSilicon has released a series of chips geared for artificial intelligence under the name Kirin, which are currently used in some of Huawei’s smartphones. The company has boasted that some Kirin chips can compete with the likes of Qualcomm Inc. and Nvidia Corp. In January, HiSilicon unveiled its first self-developed chipset for base station servers — called Kunpeng 920.

Still, Huawei remains heavily dependent on outside suppliers, especially U.S. companies, in key areas such as base stations and chip-making. Huawei has said it imports about 30% of its components from U.S. firms, with those components worth about $11 billion annually.

Some key design technologies that HiSilicon uses in its own chip-making rely on American firms, such as Synopsys Inc., according to a report late last year from consultancy Jefferies.

If Huawei loses its U.S. supply chain, HiSilicon can’t be the substitute for certain kinds of chip-making tools, which can only be provided by American companies, Jefferies said in another report Thursday.

The U.S. Commerce Department’s action against Huawei mirrored a similar move last year against its smaller domestic rival ZTE Corp. That move forced ZTE to halt operations for several months until the two sides reached a settlement, highlighting Chinese high-tech firms’ dependence on imported components.

In the letter, He emphasized the Huawei needs to ramp up efforts to develop homegrown technologies. “In the future, we need to be open and innovative, while seeking to achieve self-reliance.”

Contact reporter Mo Yelin (yelinmo@caixin.com)

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