Samsung is in talks with Huawei about chip foundry

A year after putting Huawei on the so-called “entity list”, the US government has once again upgraded its approach to cutting off Huawei’s chip supply across the board by changing direct product rules. Against this backdrop, Samsung and Huawei are exploring a “two-way” deal to make advanced chips for Huawei’s 5G devices in return for giving some of its global smartphone market share to Samsung, according to Phonearena, a well-known foreign digital technology media outlet. However, the authenticity of this report has yet to be confirmed.

Samsung is in talks with Huawei about chip foundry

The report said the inclusion of the “entity list” prevented Huawei from getting the authorization of Google’s mobile services, and while that’s no big deal in China, its global users may miss Google App Store, Google Maps, Google Search, Gmail, YouTube and others. Huawei is working to build its own ecosystem and debuted in its P40 series this year. The company has even launched its own petal search, which can jump to a third-party web app store that supports downloading if a particular app is not available for download on Huawei AppGallery.

But even under the pressure of the U.S. supply cuts, Huawei shipped 240million smartphones last year, surpassing Apple and second only to Samsung. According to a recent report bymedia, Huawei led Samsung Electronics to the top in April with a market share of 21.4 percent.

If Huawei has any Achilles heel, it is its Seas chip division, which relies on TSMC to contract cutting-edge chips. Under the new ban, TSMC could not make chips for Huawei from September, the report said. Huawei may have enough 5nm chips to make the Mate 40 and Mate 40 Pro phones, but what about Huawei starting next year’s P50? What’s more, as the world’s largest supplier of telecommunications equipment, its 5G equipment also requires cutting-edge chips.

There have been previous ideas to circumvent the new rules, such as buying TSMC chips through MediaTek, but TSMC has said it will not allow that to happen. But Samsung may offer Huawei a perfectly legal solution, making it the world’s second-largest independent chip contract. The company has built a small production line that uses only Japanese and European chip manufacturing equipment to produce 7nm chips.

Asmer corporation of the Netherlands (ASML) has supplied Samsung with an ultraviolet lithography machine that can produce microtransistors on 7nm wafers. Machines used to test chips can be purchased from Japan without U.S. involvement.

Samsung’s plans with Huawei are likely to work because Samsung relies more on mobile phone business than Huawei, whose core business remains telecommunications equipment, the report said.

Huawei also handed over some of its chip contracts to SMIC, China’s leading chipmaker. But the latter’s most advanced chip uses a 14nm process, lagging behind TSMC. Although it hopes to produce the 7nm chip by the end of this year, it must obtain u.S. approval before supplying Huawei with U.S. technology.

In fact, America’s technological bullying would encourage the world to circumvent American technology and ultimately hurt its own interests.

“The revised rules are outrageous and industrially damaging,” Huawei said in a media statement on the new U.S. rules, saying the rule changes would affect not only Huawei, but also related industries around the world. In the long run, the trust base of global cooperation in industries such as chips will be destroyed, and conflicts and losses within the industry will be further aggravated. The U.S. use its technological advantages to crack down on other countries’ businesses will certainly undermine the confidence of other countries in the use of U.S. technology elements, and ultimately hurt The U.S. own interests.

This has also become the consensus of many media and analysts. In a recent blog post, Dr. Monica Paulini, founder and lead of Senza Fili Consulting, a US telecommunications consulting firm, and an expert in wireless technology, points out that in order to eliminate or minimize dependence on the United States, Chinese suppliers (and possibly others) will invest more in research and development and develop technologies based on domestic intellectual property; Regional ecosystems may emerge, and the expansion of geographic diversity will increase competition for U.S. companies.

Strategy Analytics has also published an industry insight entitled “Sanctions against China: Harming the Telecommunications Industry, the Global Semiconductor Industry, and the U.S. Economy,” which points out that the new U.S. trade policy against Huawei has broken the network of relationships between the electronics industry and global trade and poses a threat to U.S. semiconductor industry leadership.