Huawei chairman claims US sanctions will benefit China's chip industry

Huawei Logo Smartphones USA US America Flag Illustration AH May 20 2019

It’s not exactly a secret Huawei has been hit hard by US sanctions. This has been going on for years, and it has been getting worse over time. The company lost access to Google Play Services, and a while back, a new wave of chip-focused sanctions were issued. Well, a Huawei chairman believes that US sanctions will only benefit China’s chip industry.

Huawei chairman says that US sanctions will benefit China’s chip industry

This comment comes from Eric Xu, CNBC reports. He says that China’s chip industry will be “reborn” thanks to these sanctions. As some of you may know, since 2020, foundries using US technology are prevented from shipping the latest silicon to Huawei. On top of that, China is not allowed to purchase extreme ultraviolet (EUV) lithography machines that are needed for producing modern chips.

Eric Xu believes that China will become self-sufficient when it comes to producing chips. SMIC, the country’s largest foundry, is still a couple of steps behind, however. TSMC and Samsung are mass-producing chips using a 3nm process node, while SMIC is stuck at 14nm at best. This is mainly due to the fact they cannot access the EUV lithography machines, as mentioned earlier.

It is to be expected that such sanctions will push China into action. The question is, how long will it take them to catch up. Huawei has been hit hard by sanctions over the years. It had the prospect of becoming the world’s number one smartphone manufacturer before the first sanctions arrived.


The US sanctions hit Huawei, hard

Eric Xu did admit that the company’s business got hit by US sanctions, quite a bit. Huawei has reported a 69% decline in annual profit for 2022, which is its biggest decline since 2011. We’re looking at a decline of $5.18 billion.

Xu said the following: “In 2022, a challenging external environment and non-market factors continued to take a toll on Huawei’s operations. In the midst of this storm, we kept racing ahead, doing everything in our power to maintain business continuity and serve our customers”.

Huawei’s consumer business, including smartphones, has seen its revenue decline more than 11% to 214.5 billion yuan ($31.22 billion). It remains to be seen how will Huawei fare in 2023.