Huawei is planning to start a dedicated chip manufacturing factory in Shanghai that wouldn't depend on American chip technologies. The chip factory will supply t0 Huawei's telecom business for core infrastructure.
Apparently, Shanghai IC R&D Center, a partner company, will run the chip manufacturing plant instead of Huawei or its subsidiary.
Incidentally, the Shanghai Municipal government backs the Shanghai IC R&D Center, which is actually a research company.
Earlier this year, the US had imposed sanctions preventing Huawei from accessing chips from any manufacturer who used US technology in the chip manufacturing process.
By that time, Huawei had already stocked up on semiconductor chips for its telecom business. In fact, the Chinese manufacturer had stated that it has chips for its telecom core infrastructure business for at least a year.
However, industry analysts fear that Huawei may be running out of semiconductor chips for its telecom arm soon. In light of this development, analysts expect Huawei to be future-proofing its supply chain for chips.
Huawei also seems to want to reduce its dependence on American chip manufacturing technology. As such, the Shanghai chip manufacturing plant will not rely on American technology.
This helps Huawei to bypass and circumvent the US sanctions imposed earlier this year.
Huawei Plans Chip Manufacturing of 20nm 5G chips by 2022
The new chip manufacturing plant is expected to start manufacturing low-end 45nm chips sometime this year. As a matter of fact, global chip-manufacturers used 45nm chips around 15 years ago.
As such, this is a low-grade, low-end chip that could end up in some Huawei telecom gear at the edge of the network, where computing power needs aren't too high.
Huawei also plans to upgrade the chip manufacturing to make 28nm chips at the Shanghai plan in 2021. These chips usually come in use in smart TVs and other low-end IoT devices.
By 2022, Huawei plans to ramp up the Shanghai plant to make 20nm chips. Huawei would deploy these 20nm chips in its 5G telecom equipment mostly.
However, the Shanghai chip manufacturing plant will not help Huawei with smartphone chip supplies. The semiconductor chips used in smartphones are made with much more sophisticated technologies.
Also, usually, 5G equipment would need more advanced 14nm chips, Huawei can still make use of the 20nm chips initially for the core infrastructure gear.
The Chinese manufacturer would then have to streamline its network design and system software to overcome shortcomings with the lower quality 20nm chips.
Since early this year, President Donald Trump has been mounting pressure on China by banning the sale of Huawei's equipment to American suppliers. The US is pushing other governments to follow suit and ban Huawei products citing espionage concerns.