BEIJING/SHANGHAI- In a clear indication that Huawei Technologies is finding innovative ways to circumvent four years of stringent U.S. export controls, a unit of the Chinese tech giant has been discreetly shipping new Chinese-made chips destined for surveillance cameras. Two sources with knowledge of the unit's efforts have revealed this development.
These chip shipments, produced by Huawei's HiSilicon chip design unit, commenced earlier this year, as confirmed by one source, and corroborated by another source familiar with the industry supply chain. Notably, at least some of these chips are reportedly being supplied to Chinese customers.
In addition to this covert chip venture, Huawei has also recently unveiled new smartphones featuring advanced domestically-made chips. Analysts have highlighted that these developments demonstrate Huawei's resilience in the face of Washington's export controls, which, since 2019, have restricted the company from sourcing components and technology from U.S. firms without prior approval.
A notable aspect of this success is the apparent ability of Huawei to work around U.S. limitations on chip design software. Back in March, Huawei announced significant breakthroughs in design tools for chips manufactured at and above 14 nanometers. While this may be a few generations behind cutting-edge technology, it represents a significant advancement for the company.
Historically, HiSilicon primarily supplied chips for Huawei's own equipment but also had external clients such as Dahua Technology and Hikvision. Before the U.S. export controls took effect, HiSilicon held a dominant position in the surveillance camera sector, with a global market share estimated at 60% in 2018, according to Southwest Securities.
However, by 2021, HiSilicon's global market share had plummeted to a mere 3.9%, according to data from Frost & Sullivan.
One source familiar with the unit's efforts revealed that HiSilicon had shipped some low-end surveillance chips since 2019, but their primary focus has been on the high-end market segment, aiming to recapture market share from competitors like Taiwan's Novatek Microelectronics Corp.
All sources involved in this matter chose to remain anonymous due to its sensitivity, and Huawei declined to comment on the situation.
The recent unveiling of the Mate 60 Pro smartphone by Huawei, featuring an advanced chip capable of 5G speeds, has raised eyebrows. Research firm TechInsights examined the device and suggested that the chip, the Kirin 9000S, was most likely manufactured in China by Semiconductor Manufacturing International Corp (SMIC). This marks a departure from Huawei's previous partnership with Taiwan's TSMC for chip manufacturing.
However, U.S. lawmakers have expressed concerns and called for increased pressure and "more effective export controls" on both Huawei and SMIC. U.S. Commerce Secretary Gina Raimondo recently stated that the United States has no evidence that Huawei can produce smartphones with advanced chips in large volumes.
One of the key challenges posed by the U.S. sanctions has been HiSilicon's limited access to essential electronic design automation (EDA) software from major providers like Cadence Design Systems Inc, Synopsys Inc, and Siemens AG's Mentor Graphics. These software tools are critical for designing chips, and their scarcity has posed a significant hurdle for Huawei.
TechInsights analyst Dan Hutcheson suggested that Huawei's access to sophisticated EDA tools, as indicated by their recent product releases, raises questions about whether they acquired them illicitly or if China developed its own EDA tools. This further underscores the complexity of Huawei's strategy to overcome export controls and remain a prominent player in the tech industry.