As pressure mounts on China’s semiconductor manufacturing industry, especially following U.S. sanctions, the Chinese telecom and chip design giant Huawei has lately taken steps to build its own chip manufacturing capability. Several TSMC suppliers who did not wish to be named had revealed that Huawei had approached them to assist in establishing a foundry.
Sources indicate that these TSMC suppliers include Gudeng Precision Industrial Co., a manufacturer and vendor of photo masks, Marketech International Corp., an integrated solution provider for cleanroom and other foundry equipment, and United Integrated Service Co., another system integrator involved in foundry construction.
The initial investment in the project will cost billions of dollars, according to the industry’s estimation. Most important of all, Huawei is rumoured to be cooperating with Semiconductor Manufacturing International Corp. (SMIC), China’s most advanced foundry and also the world’s 5th largest.
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Fuelling the speculation was the recently founded Huawei Precision Manufacturing Co. Ltd. With a registered capital of US$94 million, the company will manufacture the core components and modules for optical communication, optoelectronics, and discrete semiconductor products.
According to a Huawei insider, the newly created subsidiary is capable of a certain scale of volume production and limited trial production. At this stage, however, Huawei Precision Manufacturing Co. focuses on meeting Huawei’s own system integration needs. The Huawei insider also stressed that the new subsidiary’s semiconductor business was dedicated to the testing and packaging of discrete devices, ruling out the fabrication of system-on-chip products.
It remains to be seen what trajectory Huawei Precision Manufacturing Co. will take in the future. If Huawei eventually developed its own chip fabrication capability, combined with its chip design ability and diverse product portfolio, it would make the company a potentially powerful Integrated Device Manufacturer (IDM).
♦ Further reading – Is Huawei making its own lithography equipment?
In fact, Huawei has already taken steps towards vertical integration:
The waves of U.S. sanctions on Chinese semiconductor industry since 2019 saw both SMIC and HiSilicon, Huawei’s chip-designing subsidiary, taking severe blows as the country’s leading semiconductor champions. The sanctions also prompted China to recognise the strategic importance of upstream semiconductor equipment and materials.
Consequently, Huawei was speculated to be developing its own lithography machines. In mid-2021, Huawei invested in Beijing RSLaser Opto-Electronics Technology, a company founded to commercialize the result of China’s national research program in argon fluoride (ArF) laser, which operates in the deep ultraviolet (DUV) at a 193-nanometer wavelength.
In addition, RSLaser is also a supplier of Shanghai Microelectronics Equipment Co. (SMEE) – China’s leading lithography equipment manufacturer that has been working on the country’s first 28nm lithography machine.