What's new

Tall chip tale? Huawei's backup plans leave experts unconvinced

F-22Raptor

ELITE MEMBER
Joined
Jun 19, 2014
Messages
16,980
Reaction score
3
Country
United States
Location
United States
SAN FRANCISCO/HONG KONG (Reuters) - Chip experts are calling out Huawei for its claims that it could ensure a steady supply chain without U.S. help, saying the technology the Chinese telecoms network gear maker buys from American companies would be “hard to replace”.

The Trump administration officially added Huawei to a trade blacklist on Thursday, enacting restrictions that will make it difficult for the tech giant to do business with American firms, in its latest broadside against the company that U.S. officials have labelled a threat to national security.

The head of Huawei’s HiSilicon chip division on Friday shrugged off concerns about disruptions to supply, saying it has long been preparing for this kind of “extreme scenario”.

Huawei will aim to be technologically “self-reliant” going forward, He Tingbo said in a letter to staff.

But that is easier said than done, industry experts say.

“I would be surprised if HiSilicon can make it without any U.S. suppliers,” said Linda Sui, a Strategy Analytics analyst.

A China-based source at a U.S. tech company previously told Reuters that none of Huawei’s U.S. suppliers “can be replaced by Chinese ones, not within a few years, at least”.

As an example of Huawei’s reliance on U.S. firms, an expert pointed to the high probability that the tech giant uses chip design software from market leaders Cadence Design Systems Inc and Synopsys Inc.

Huawei designs its microprocessors and other chips for products including the Mate series flagship smartphones.

The U.S firms’ software is considered gold standard, used by manufacturers globally to perfect chip blueprints and test them before committing them to physical silicon, where a single mistake can set back a chip for months.

“It’s hard to replace,” said Mike Demler, a senior analyst with The Linley Group. “Cadence and Synopsys pretty much have all the ground covered for anything you would need,” he said.

“I’m sure there’s some equivalent that tries to fill the same roles from Chinese companies, but the Chinese just do not have a presence we’re aware of outside of the country.”

Cadence and Synopsys did not respond to requests for comment. Huawei said it cannot comment.

SPECIALISED CHIPS, LASERS
Huawei also has exposure to U.S. suppliers of speciality lasers and modules such as NeoPhotonics, Lumentum and Finisar.

The lasers, which are used to send information in the form of light signals through fibre-optic cables, are critical to Huawei’s world-leading telecom network equipment business.

Firms like Finisar, which is being bought by II-VI Inc, and Lumentum have put decades of work into being able to make large quantities of lasers, said Philip Gadd, a retired chip executive who once ran Intel’s silicon photonics division.

“Even if the Chinese could do it, I don’t think they could come up to scale,” he said.

Finisar is trying to determine the impact of the Huawei ban, according to a person briefed on the matter.

Finisar and Lumentum did not return requests for comment. NeoPhotonics, which gets most of its revenues from four firms including Huawei, declined to comment.

Huawei has sought to develop its own capabilities in the field, in part by purchasing a former British Telecom research centre in 2012 and startup Caliopa in 2012.

“The Chinese have been on an acquisition path,” said one silicon photonics executive. “They’ve been buying up bits and pieces wherever they could. A lot of the (U.S. government) restrictions have come too late.”

But Huawei relies on so-called chip “foundries”, especially Taiwan Semiconductor Manufacturing Co Ltd (TSMC), for the complex task of physically producing the chips that it designs. That is a common practice in the chip industry.

By contrast, many silicon photonics firms such as Finisar, still make their own chips.

MARCH TO SELF-SUFFICIENCY

Huawei has been under pressure since early in the decade over U.S. allegations its gear could be a conduit for Chinese spying, a concern the company says is unfounded.

The United States has ratcheted up the rhetoric in the past year, calling on allies to bar the firm from next-generation 5G mobile networks while locking horns with China in a trade war.

Against this backdrop, Huawei has been a key part of China’s campaign to develop its own capabilities in chips and reduce reliance on imports from companies such as Qualcomm, Intel and Samsung Electronics .

Huawei’s chip division produced more than $7.5 billion worth of chips last year, its rotating chairman Eric Xu had told Reuters. That compares with an estimated $21 billon (16.46 billion pounds) worth of chips that Huawei acquired from outside vendors.

A Huawei spokesman said the company will use HiSilicon products to substitute banned American components where possible, but declined to provide more details.

HiSilicon’s He has described the self-sufficiency efforts as a “long march in the history of technology” that would pay off with the United State’s “crazy decision”. “All the spare tires we have been making, now is the time to use them!”

https://uk.reuters.com/article/uk-u...plans-leave-experts-unconvinced-idUKKCN1SN0YW
 
A few years back, US banned China from buying Intel Xeon HPC processors. Chinese came up with their own CPU Matrix 2000 in the matter of a year, then their supercomputers took the crown on Top 500, and stayed there for long time. Now they have 3 HPC processor vendors of their own.

I guess some people just never understand what Chinese are made out of.
 
A few years back, US banned China from buying Intel Xeon HPC processors. Chinese came up with their own CPU Matrix 2000 in the matter of a year, then their supercomputers took the crown on Top 500, and stayed there for long time. Now they have 3 HPC processor vendors of their own.

I guess some people just never understand what Chinese are made out of.

As a result, HPC processors magically went bankrupt.o_O
 
Why are you so desperate raptor-san. Its the survival of the fittest, if they can't replace then they will give in. It's as simple as that. Is America getting jittery!
 
IMO, China better sign the trade deal. "Biting more than one can chew"
Huawei now resorting to begging.

I fear China may start external war for diversion.



https://asia.nikkei.com/Economy/Tra...rs-dust-off-backup-plans-to-prepare-for-storm

TRADE WAR
Huawei and suppliers dust off backup plans to prepare for storm
Asian chipmakers TSMC, Toshiba Memory and Innolux assess US ban

CHENG TING-FANG, LAULY LI, RURIKA IMAHASHI and ALEX FANG, Nikkei staff writersMAY 18, 2019 03:52 JST
https%3A%2F%2Fs3-ap-northeast-1.amazonaws.com%2Fpsh-ex-ftnikkei-3937bb4%2Fimages%2F5%2F9%2F7%2F6%2F20816795-1-eng-GB%2F0522619.jpg

Huawei urged suppliers to keep making deliveries despite new U.S. measures that could block its access to key American technologies. (Nikkei montage/Getty Images)
TAIPEI/TOKYO/NEW YORK -- Huawei Technologies is asking its top Asian chipmakers to maintain deliveries after Washington announced draconian measures to curb the Chinese telecommunications giant's access to American technology, sources familiar with the matter said.

Taiwan Semiconductor Manufacturing Co., the most important chip producer for Huawei's mobile and networking core processors, said it will maintain supplies for the time being even though it continues to assess the impact of Washington's decision this week to bar Huawei from receiving U.S. technologies.

"We have established a complicated and sophisticated export control compliance system," TSMC spokesperson Elizabeth Sun said. "Based upon the data in the system we are not changing our shipping practice for the time being."


But the Taiwanese chip titan hinted that it could suspend supplies if ongoing reviews lead it to a different conclusion.

The U.S. Department of Commerce said Thursday that it would add Huawei to its Entity List, meaning that the sale or transfer of American technology to the company will require a license, with a presumption of denial. The Trump administration's move strikes at the heart of the ambitions of the Chinese company, which relies heavily on chips and other key components using U.S. technologies.

Toshiba Memory, the world's second-largest NAND flash memory chip supplier, declined to say whether its products contain American technologies as it studies the details of the U.S. regulation.

Display panel maker Innolux, which supplies screens for Huawei smartphones, tablets and notebook computers, said it will talk to Huawei.

"Our executives have discussed it and we think it will have an impact based on our preliminary evaluation, but it is hard to determine the scope of the impact as of now," an Innolux spokesperson said. The Taiwan-based company said its shipping schedule for Huawei currently remains unchanged. Japan Displayalso expressed uncertainty about the impact of the U.S. move to restrict exports to Huawei.

Key American chip suppliers such as Qualcomm and Qorvo had suspended shipments Friday, a source familiar with the matter said, while other U.S. companies are set to follow suit as the restrictions take effect, according to lawyers and industry sources. Most Asian suppliers, including TSMC, Foxconn, Japan Display and Toshiba Memory, are carefully reviewing whether they could be running afoul of American regulations by using such American technologies as software, intellectual property, tools and materials.

Kevin Wolf, a former U.S. assistant secretary of commerce who is now a partner at the Akin Gump Strauss Hauer & Feld law firm in Washington, said anything made in America, and anything of foreign origin that contains a significant percentage of controlled U.S. content, falls within the scope of the rules.

"Whether it's telecom equipment, a toothbrush [or] a product plant," it would require a license to be sold to Huawei, Wolf said.

"The scope of a listing is exports to Huawei directly or indirectly," he said. "That would be how you would prohibit the sale to Company X supplying that content to a Huawei company."

Huawei had attempted to prepare for the worst by stockpiling six months' to more than a year's worth of certain American components, the Nikkei Asian Review has reported. But the company did not expect the restrictions to also cover all foreign suppliers that indirectly use a certain amount of U.S. technologies to build products for it. This caught the Chinese company off-guard, people familiar with the matter said.

President Teresa He Tingbo of Huawei unit HiSilicon Technologies, China's top chip developer, said Huawei is in a battle to survive after its "darkest day" in an open letter early Friday. "The global superpower has ruthlessly made this decision to abruptly sever global technology partnerships and supply chains for no reason," she wrote.

"We actually have foreseen this day for many years, and we do have a backup plan," the letter said.

HiSilicon designs core processor chips for mobile and networking equipment and also builds 5G modems. Huawei's investment in chip design dates back a decade, and the company is far more self-reliant than smaller peer ZTE, which was forced to temporarily halt operations when American technology exports to it were blocked last year. But Huawei needs TSMC's advanced chip plants to turn its designs into reality. Currently, only Samsung Electronics, Intel and TSMC have such advanced fabs to produce chips that Huawei and Apple need for their latest smartphones. But Samsung and Intel build chips largely for themselves, not others.

If TSMC cuts off supplies, "Huawei's business could come to a halt and be in trouble," said Mark Li, an analyst with Sanford C. Bernstein.

The company also contacted suppliers in Asia to keep them from abandoning it. "We do receive calls from Huawei to assure us that it will continue placing orders and to assure us that they have enough technology to deal with the storm," a chip industry executive said.

But many market watchers still doubt whether Huawei can survive and ship all its products on schedule in these severe conditions.

"If the U.S. controls the use of Google's Android system on Huawei smartphones, then this could be a killing blow to the company," said Liang Yaguang of global market research firm Kantar Worldpanel in Beijing. While Huawei has started developing its own operating system, it may be years before its software has sufficiently matured to replace Android, the analyst said.

Bernstein's Li also doubts that Huawei can still ship products smoothly once U.S. software and technical support are cut off.

If Huawei falls into chaos and cannot deliver products, "it would be a big disruption for the whole supply chain," GF Securities analyst Jeff Pu said. Such rivals as Apple, Samsung or even Oppo, Vivo and Xiaomi could gain share, but it would still cause great turmoil for the tech sector, he said.

Nikkei Asian Review chief business news correspondent Kenji Kawase and Nikkei staff writer Coco Liu in Hong Kong contributed to this report.
 
A wounded warrior is suffering ED, and a castrated street vendor found the reason to celebrate. :coffee:
 
Just to re-iterate. No one wants China to fail. We want to see China succeed like Japan. Become an open society one day.

I feel this Huawei/ZTE like pressures are only to get a IP/Forced tech deal. Log term it is better for US and China to co-operate with each other. No one wants to dance on another's grave. China and US can truly make it Win-Win for both.

Summary of Huawei revenue dependence among some larger names in the tech sector

MU: 13%
QRVO: 8%
SWKS: 10%
XLNX, Flex, MACOM, Marvell, ON, WD, Seagate, Microchip, AVGO, ADI, TXN, NXPI and KEYS: 1-5%

This Huawei thing is ... material
Huawei affects US co's too & vice versa.
 
If TSMC cuts off supplies, "Huawei's business could come to a halt and be in trouble," said Mark Li, an analyst with Sanford C. Bernstein.

China is Taiwan’s largest trade partner, absorbing nearly 30% of Taiwan’s exports by value.

What happens when China puts a full embargo on all Taiwan goods?

Furthermore, Taiwan manufacturers like Foxconn, Quanta, Pegatron, Compal, Wistron, and Inventec all have factories in China.

Chinese government can nationalize and seize all assets of these companies.

Is Taiwan masochistic enough to play this game? I haven't even mentioned military options yet.:lol:
 
China is Taiwan’s largest trade partner, absorbing nearly 30% of Taiwan’s exports by value.

What happens when China puts a full embargo on all Taiwan goods?

Furthermore, Taiwan manufacturers like Foxconn, Quanta, Pegatron, Compal, Wistron, and Inventec all have factories in China.

Chinese government can nationalize and seize all assets of these companies.

Is Taiwan masochistic enough to play this game? I haven't even mentioned military options yet.:lol:

If China takes action on Taiwan or it's assets, FDI to China drops to 0 overnight. China will become a pariah in the eyes of First world countries. Capital flight from China also. Dangerous times. Xi & Wang Qishan better think through this properly. It has been a gross under estimation of USA by China, Unforgivable. Xi may be sacrificed, like Hua Guofeng

it is not in anyone's interest for this to happen. China may cause diversion via War, maybe West is planning for this action from China.
 
If China takes action on Taiwan or it's assets, FDI to China drops to 0 overnight.

Go ahead and pull out the FDI. 90% of desktops and laptops (uh-oh Intel) are currently manufactured in China. 90% of motherboards. The vast majority of graphics cards (uh-oh NVIDIA) are currently made in China. Most smartphones. Many consumer electronics. Nokia and Ericsson are headquartered in Scandinavia but much of their equipment is manufactured in Chinese factories. Good luck doing 5G without China.

Go ahead and leave.

China will be keeping all the factories. :lol:
 
If China takes action on Taiwan or it's assets, FDI to China drops to 0 overnight. China will become a pariah in the eyes of First world countries. Capital flight from China also. Dangerous times. Xi & Wang Qishan better think through this properly. It has been a gross under estimation of USA by China, Unforgivable. Xi may be sacrificed, like Hua Guofeng

it is not in anyone's interest for this to happen. China may cause diversion via War, maybe West is planning for this action from China.

It has been hard for the US to stomach the rise of China...and the chances of war are increasing once you push someone in a corner and force them to fight for their survival
 

Pakistan Affairs Latest Posts

Back
Top Bottom