Americans no longer supply chips to Chinese Huawei to curb technological progress

This is what the British business newspaper writes Financial Times and American media. The Chinese company has been hit hard by the strict trade restrictions imposed by the Americans since 2019, but has recently bounced back. For example, Huawei’s profits doubled last year.

According to the United States, Huawei facilitates Chinese espionage, including through its 5G network equipment. The company strongly denies that accusation. With the supply ban, the US also wants to frustrate China in developing weapons technology and artificial intelligence.

Despite the trade restrictions, Intel and Qualcomm were granted an exceptional position in 2020, under the Trump administration, to sell computer chips to Huawei. China is an important market for the companies, Intel booked more than a quarter of its turnover in China last year.

American chips

Republican lawmakers responded last month after Huawei launched a new laptop with an Intel processor. As far as they are concerned, the Chinese company should not get its hands on any American computer chips. Possibly in response to this, the Biden administration is tightening the thumbs further by revoking the export license of the two companies.

The US Department of Commerce confirmed it has imposed new export restrictions on Huawei, but declined to name specific companies. Huawei, Intel and Qualcomm did not respond. The Chinese Foreign Ministry believes that the Americans are wrong to invoke national security ‘to keep Chinese companies small without justification’.

The question is to what extent Washington will succeed in slowing the advance of Huawei and other Chinese tech companies. Not only is Huawei climbing out of a slump again, the Chinese chipmaker SMIC proved to be able to build advanced chips itself last year – to the shock of the Americans. This despite export restrictions on the most modern chip machines from the Dutch ASML, enforced by the Americans.

The Chinese chip is in a new phone from Huawei, the Mate 60 Pro. The success of this model helped lead to Huawei’s phone sales increasing by 64 percent in one year, according to research agency Counterpoint.

ASML

The fact that China unexpectedly quickly appears to be able to produce advanced chips was also discussed at the ASML shareholders’ meeting last month. The Dutch company is the only one in the world to build so-called EUV machines, chip machines that are capable of producing the finest-meshed and therefore most powerful chips. Due to export restrictions, the company is not allowed to supply them to China, but China now manages to produce comparable chips with older machines.

CEO Peter Wennink, who has since resigned, said he sees no direct threat to the Veldhoven-based company. The Chinese method is slower, more prone to errors, and therefore more expensive and more difficult to scale than using EUV machines, he pointed out. In order to be able to etch lines as close together as EUV machines, SMIC’s coarser equipment must expose the silica layers that make up a chip much more often.

Chinese government agencies are increasingly banning American chips from their systems and want to get rid of American operating systems such as Windows, the company revealed Financial Times in March. Western chips and systems must be replaced by Chinese alternatives.