February 12, 2025
New phone raises concerns that China has found a way to bypass US tech limits

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While Commerce Secretary Gina Raimondo was visiting China earlier this week, a sea green Chinese smartphone was quietly launched online.

This was no ordinary gadget. And its launch has sparked deep concern in Washington that US sanctions are failing to prevent China from making significant technological advances. Such a development would seem to meet warnings from US chip makers that sanctions would not stop China, but spur it to redouble efforts to create alternatives to US technology.

Huawei Technologies Co’s new smartphone, the Mate 60 Pro, represents a new high-water mark in China’s technological capabilities, with an advanced chip inside that is being manufactured in China despite tough US export controls intended to prevent it from being made in China. was designed and manufactured. This technological leap. Those sanctions were first imposed by the Trump administration and continued under President Biden.

On Monday, when Raimondo was in Beijing, the timing of the announcement by phone appeared to be a show of defiance. Chinese state media announced that it showed the US that the trade war was a “failure”.

Paul Triolo, head of technology policy at Albright Stonebridge Group, a Washington-based business consulting firm, called the new phone “a huge blow to all of Huawei’s former technology suppliers, mostly US companies.”

“Of major geopolitical importance is to show that it is entirely possible to design,” he said. [without] American technology and still produces a product that may not be as good as the state-of-the-art Western models, but is still quite capable.

Biden administration officials declined to comment.

How powerful the new chip design is remains an open question. Unusually, Huawei revealed little about key aspects of the phone in its announcement, such as whether it was 5G-capable or what process was used to manufacture it. In a statement, Huawei described the phone as a breakthrough in “satellite communications”.

China’s official broadcaster, CGTN, in a post on XWhat was formerly known as Twitter called the phone Huawei’s “first high-end processor” after the US ban and said the chip it contained was made by Semiconductor Manufacturing International Corp., which partially A company owned by the Chinese government.

One person told The Washington Post that the Mate 60 Pro has a 5G chip. Speed ​​tests posted online by early buyers of the phone show that its performance is on par with top-of-the-line 5G phones. In July, Reuters reported Huawei’s imminent return to the 5G phone market, citing three technology research firms on condition of anonymity.

Nikkei Asia, citing sources, has reported that SMIC will use a process known as the “7-nanometer process,” which is the most advanced level in China, to make chips for Huawei. This would be equivalent to the process used for the chips inside Apple’s iPhones launched in 2018. Apple’s latest iPhone chips were made by Taiwan Semiconductor Manufacturing Co. on what’s known as a four-nanometer process. Nanometers are a measure of chip size, the fewer nanometers in the process, the better. A piece of paper is about 100,000 nanometers thick.

The US sanctions were aimed at slowing China’s progress in emerging areas such as artificial intelligence and big data by cutting off its ability to buy or make advanced semiconductors, which are the brains of these systems. The unveiling of a domestically manufactured seven-nanometer chip suggests that hasn’t happened.

Industry experts caution that it is too early to tell how competitive China’s chip manufacturing will become. But what is clear is that China is still in the game.

“This shows that Chinese companies like Huawei still have a lot of innovation potential,” said Chris Miller, a professor at Tufts University and author of the book “Chip Wars.” “I think this will probably intensify the debate in Washington about whether the sanctions should be tightened.”

Some stakeholders have yet to publicly express opinion, as industry groups seek to confirm more details and evaluate their stances. But there’s no doubt that the new Huawei phone has started the buzz on what’s to come next. “There’s a lot of activity,” said Craig Allen, president of the US-China Business Council, a nonprofit group promoting trade between the United States and China.

Opinions differ on how the US government should respond.

“This development will certainly prompt very strong calls for Huawei’s US suppliers to further tighten export control licensing to be able to ship commodity semiconductors not used for 5G applications,” Triolo said. Are.”

On the other hand, he said, “US semiconductor companies would prefer to be able to continue to ship commodity semiconductors to Huawei and other Chinese end users in order to maintain market share and avoid design delays.” [without] American technology is more widely available through Chinese supply chains.”

Washington faced a similar dilemma during the Cold War over how to impede the technological advances of the Soviet Union. Harvard Business School economist Willy Shih said Huawei’s success illustrates what happened with Global Positioning System technology, now more commonly known as GPS. The US Department of Defense developed the technology and, wary of its danger at the hands of rivals, restricted its exports. But export restrictions have prompted Moscow and other governments to develop their own versions, Shih said.

“So it was a situation where America really dominated that technology and everybody came to America to buy it, now there are all these different options,” he said. “And you have to wonder if the same thing is happening with Huawei now.”

China’s race to make advanced domestic chips began in May 2019, when the Commerce Department put Huawei on its “Entity List,” amid the Trump administration’s trade war with China, barring US companies from doing business with it. given. Some wondered whether this was a “death sentence” for Huawei, as the company was barred from obtaining key components.

Huawei has long been a target of Washington as the fastest growing pinnacle of China’s tech industry. Since 2012, Huawei has been the world’s largest supplier of equipment needed to operate the global internet, a position it has maintained despite US sanctions. Huawei files more patent applications than any other company in China, and a slew of Chinese start-ups are relying on Huawei’s AI algorithms to build their own apps for face and voice recognition, pattern recognition and other purposes. does.

Huawei’s business lines include geopolitically sensitive products including mobile base stations that provide nations with cell coverage, video-surveillance gear for police and submarine cable systems that require chips such as brains. .

In the face of the sanctions, Huawei’s charismatic founder, Ren Zhengfei, who got his start in China’s army engineering corps, rallied Huawei employees to all-out fight for his company’s survival. They stockpiled chips from foreign suppliers anticipating that Washington could plug a loophole in the sanctions. It really came true. Washington plugged the loopholes one by one, including approving SMIC, China’s only factory potentially capable of making advanced chips for Huawei — and special orders to prevent sales in China more widely. Including the emphasis on suppliers of chip-making gear.

Since then, Huawei has struggled to survive using its stockpiled chips in the race to secure a domestic chip manufacturing solution.

SMIC has strived to manufacture state-of-the-art chips since its inception in 2000, but this dream has long seemed unfulfilled. Each generation of chips represents a new frontier in how microscopically small humans can carve precise designs into sheets of silicon. By the time SMIC reached a generation, industry leaders had moved on based on new breakthroughs from the world’s most talented physicists and technologists.

“It’s hard to get hold of because the chips are the most complex manufactured by well-meaning humans,” Miller said. “There is nothing more complex than the things that humans have made…it’s a really difficult thing.”

Miller says there remains a huge gap between SMIC’s capabilities and those of industry leader TSMC, which produces the latest chips for companies like Apple. It is also unclear whether SMIC can produce the advanced chips at such a scale and cost that would make its products globally competitive.

Shih said that even if SMICs could reach the state-of-the-art, the foundry would certainly be able to mass-produce older-generation chips, potentially driving down chip prices worldwide. “We will see price pressure and commodification pressure,” he said.

US companies such as Intel and Qualcomm have already lost significant sales in China, the world’s second-largest economy, due to US sanctions that have slashed their research and development budgets. US executives fear this could affect their long-term strength, in an industry where only some of the strongest, fastest companies survive.

“It marks the beginning of a decline in the ability to not be competitive with the rest of the world,” said an industry official who spoke on condition of anonymity because of the sensitivity of the subject.

Ever since the US chip sanctions began, Beijing has ramped up its efforts to prevent the global chip industry from falling under Washington’s influence. For example, Intel recently announced that it would have to pay $353 million in termination fees to Israel’s Tower Semiconductor after it failed to obtain Chinese regulatory approval for the acquisition.

Ellen Nakashima contributed to this report.

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