Huawei unit ships Chinese-made surveillance chips in fresh comeback sign -sources
BEIJING/SHANGHAI, Sept 20 (Reuters) -A Huawei Technologies unit is shipping new Chinese-made chips for surveillance cameras in a fresh sign the Chinese tech giant is finding ways around four years of U.S. export controls, two sources briefed on the unit's efforts said.
The shipments to surveillance camera manufacturers from the company's HiSilicon chip design unit started this year, according to one of the sources, and a third source familiar with the industry supply chain. One of the sources briefed on the unit said at least some of the customers were Chinese.
Hauwei also unveiled new smartphones in recent weeks that use advanced chips, which analysts say are domestically made. The developments indicatethe Chinese tech giant is overcoming Washington's export controls, which since 2019 have barred it from obtaining components and technology from U.S. firms without approval.
"These surveillance chips are relatively easy to manufacture compared to smartphone processors," said the source familiar with the surveillance camera industry's supply chain, adding that HiSilicon's return would shake up the market.
A key factor is that the company appears to have worked around U.S. restrictions on chip design software. Huawei in March announced it had made breakthroughs in design toolsfor chips produced at and above 14 nanometres - two to three generations behind leading-edge technology, but an advance for the company.
HiSilicon mainly supplies chips for Huawei equipment but has had external customers such as Dahua Technology 002236.SZ and Hikvision 002415.SZ. Before the U.S. export controls, it was the dominant chip supplier to the surveillance camera sector,with brokerage Southwest Securities estimating its global share in 2018 at 60%.
By 2021, HiSilicon's global market share plummeted to just 3.9%, according to data from consulting firm Frost & Sullivan.
One of the sources briefed on the unit's efforts said that HiSilicon had shipped some low-end surveillance chips since 2019 but that its focus was on the high-end arena and reclaiming market share from the likes of Taiwan's Novatek Microelectronics Corp 3034.TW.
All three sources declined to be named because of the sensitivity of the matter.
Huawei declined to comment.
Huawei drew attention in late August when it rolled out the Mate 60 Pro, a new smartphone that uses an advanced chip and that users said wascapable of 5G speeds. The event was cheered by Chinese state media and the public as a comeback for Huawei's smartphone business after it was crippled by the U.S. sanctions.
Research firm TechInsights, which examined the Mate 60 Pro, found that it was powered by a new Kirin 9000S, an advanced chip it said was most likely made in China by China's top chip foundry, Semiconductor Manufacturing International Corp (SMIC) 0981.HK.
Huawei has not commented on the phone's 5G capabilities or how it produced the advanced chip. The Kirin series has historically been designed by HiSilicon, and before the U.S. sanctions Huawei, worked with Taiwan's TSMC 2330.TW to manufacture it.
The launch prompted calls from U.S. lawmakers to put additional pressure and "more effective export controls" on Huawei and China's top chip foundry, Semiconductor Manufacturing International Corp (SMIC) 0981.HK.
The United States has no evidence that Huawei can produce smartphones with advanced chips in large volumes, U.S. Commerce Secretary Gina Raimondo said on Tuesday.
The U.S. sanctions have strangled HiSilicon's access to electronic design automation (EDA) software from Cadence Design Systems Inc CDNS.O and Synopsys Inc SNPS.O, and Siemens AG's SIEGn.DE Mentor Graphics. The three companies' products dominate the chip-design sector, which produces blueprints for chips before they are mass manufactured.
TechInsights analyst Dan Hutcheson said their analysis of the Mate 60 Pro and other components such as its radio frequency power chip also suggested that Huawei had access to sophisticated EDA tools that "they are not supposed to have".
"We don't know if they got them illicitly, or more probably the Chinese developed their own EDA tools," he said.
Reporting by Beijing and Shanghai Newsrooms and Fanny Potkin in Singapore; Editing by Gerry Doyle
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.