Huawei Corporation was convicted of creating “secret factories” for the production of microchips

The Semiconductor Industry Association (SIA) said that Chinese Huawei is busy building large-scale microchip factories, which will allow the corporation, which is under US sanctions, to bypass restrictions and purchase the necessary technologies, including from the United States itself.

Huawei Corporation located under US sanctions since 2019. Last year, with the support of the central government in Beijing and the local government of her hometown of Shenzhen, estimated at $30 billion by experts, she entered the microchip market. The corporation has already acquired at least two operating microchip factories and is building at least three more such factories. The agency reports Bloomberg with reference to the presentation of the Washington Semiconductor Industry Association (SIA), which unites the world’s leading players in this market.

According to the association, factories are bought up and built secretly on behalf of other companies that do not show any involvement of Huawei in their activities. All this, according to APP experts, allows the Chinese corporation not only to create a network of semiconductor factories that is not formally connected with it, but also to indirectly purchase technologies and materials that it cannot buy directly due to existing sanctions.

In response to an inquiry from Bloomberg, the US Department of Commerce Bureau of Industry and Security said it is taking the issue very seriously and is monitoring the situation and taking appropriate action.

In particular, the bureau has already listed dozens of Chinese companies, including those mentioned in the presentation, in particular Fujian Jinhua Integrated Circuit Co. and Pengxinwei IC Manufacturing Co. According to the bureau, in light of the restrictions “it is not surprising that (these companies.— “b”) required significant government assistance to develop their own technologies.

Some independent experts believe that the danger that the APT is talking about is exaggerated. All US companies are required to follow a “know your customer” policy, that is, carefully screen their customers before entering into a transaction and refuse to sell their products in case of the slightest suspicion. In addition, they note, the lobbying organization representing the interests of such market leaders as Intel, Samsung, TSMC and others is sounding the alarm. That is, those who will be the first to suffer from any Chinese manufacturer that manages to create an effective production base.

Other experts, however, urge to take the warnings seriously. First, even the “know your customer” policy has limitations. “If there is some kind of “red flag”, then the company is obliged to conduct an investigation. In its absence, there is no mandatory requirement to verify … the information provided by the acquiring company itself,” recalls Kevin Wolfe, partner at Akin Gump law firm, cooperating with the US Department of Commerce. Secondly, possible suspicions that the AMS accusations are not self-serving may be illusory: it includes quite a lot of companies that have suffered more from the imposition of sanctions against Huawei and China than have benefited from them.

Finally, they remind, constant monitoring of the activities of Chinese companies, especially such as Huawei, is absolutely necessary, given the scale of state assistance and, therefore, the desperate measures that the state is ready to take to support and develop the national production of microchips.

Currently, this assistance is estimated at $100 billion. According to the same AMS, by 2030, China will account for more than half of the world’s production of legacy microchips. And Huawei alone’s help is almost comparable to the help that the US government provides under the so-called “chip law” and is supposed to divide among many companies.

As for the potential of the Chinese industry, Bloomberg says that by increasing the production of even obsolete chips, a company like Huawei may well acquire the necessary knowledge and ability to produce more advanced chips. You don’t have to look far for examples: this is exactly how the same Samsung and TSMC, which for a long time were not seen as serious competitors to the same Intel, won a place in the market in their time.

Viktor Buk