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Huawei chip unit short-circuited Trump’s sanctions. Then it got burned.

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Ethelyn Bryehttp://cyanosaur.com
Ethelyn Brye is an award-winning author and blogger. Growing up in Switzerland and influenced by renowned Swiss design and a lot of fresh mountain air, she attended and completed design studies in Geneva. Post graduation she moved to Washington State to work for a design firm, but her love of writing brought her to Cyanosaur. She's highly interested in strategy rpgs, mountain climbing, board games with friends and skiing. She lives in Seattle, Washington, with her lovely cat Armstrong.

For most of its history, Huawei’s tinkering in semiconductors was considered little more than a curious hobby by industry rivals.The Chinese technology company occasionally outfitted its smartphones with its homegrown Kirin chipsets, named after a mythical beast with the horns and hoofs of a deer and the scaly body of a dragon.But Kirin chips remained a rare presence in the wild. Huawei’s chip subsidiary, HiSilicon, attracted little outside attention until the Trump administration’s sanctions on Huawei brought this backup squad to the front line.“This was history’s choice today, that our spare tires were all put into use overnight,” HiSilicon’s reclusive president, Teresa He, wrote to her staff in a letter dated “before dawn,” after sanctions hit in May 2019. Google, Qualcomm, Intel and other U.S. companies suspended business dealings with the Chinese firm.Depriving Huawei smartphones of Qualcomm’s powerful processors was meant to cripple Huawei’s smartphone business. But Huawei’s handset sales stayed strong, bolstered by patriotic buying at home.And a lot of these phones now had Huawei’s chips inside them, pushing HiSilicon past Qualcomm to become China’s No. 1 smartphone chip vendor this spring.The Commerce Department was not amused. It tried again this May, forbidding the sale of U.S. technology not only to Huawei, but also HiSilicon’s suppliers and the suppliers of those suppliers.“For HiSilicon, it’s really a big hit,” Linda Sui, a director at research firm Strategy Analytics, said of the new sanctions. “Nobody can bypass U.S. technology.”Closing loopholesA smartphone chipset looks unassuming — a small, black square — but it reflects the limit of how small and precise humans can draw a pattern. In high-end smartphone chips, each transistor, or switch, is so small that more than 10,000 of them, end to end, would still be less than the thickness of a sheet of paper. Each new generation must be smaller yet.To cope with the crushing research costs, companies and nations decided decades ago to specialize. Today, a few companies flatten sheets of pure silicon into near-perfectly flat surfaces, while several others make machines that draw microscopic patterns with beams of light.Other companies make software to design the circuit paths, and yet other companies construct the chips in rooms so clean the air is free of dust.These specialized suppliers are now being told to pick between the United States or China, resulting in a profound remapping of the global semiconductor supply chain. A number have chosen the United States in recent weeks, deepening Beijing’s urgency to develop its own suppliers.For instance, Taiwan Semiconductor Manufacturing Co. — which manufactures cutting-edge chips for Huawei as well as Apple and other leading brands — said earlier this month it will follow the U.S. sanctions, leaving HiSilicon in the lurch.Semiconductor fabrication plants, or fabs, like TSMC have little choice but to abide by the U.S. sanctions, as they rely on U.S. suppliers to operate, said Dan Wang, a technology analyst at Gavekal Dragonomics.“Any modern semiconductor fab requires U.S.-origin equipment,” he said.Huawei has been quiet on the new sanctions, beyond a statement in May
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