Threat For Nvidia, AMD? Huawei Ramps Up Semiconductor R&D In Shanghai To Counter US Restrictions

Nvidia, AMD chip-rival Huawei Technologies is significantly bolstering its semiconductor research and development capabilities by establishing a new, expansive center in Shanghai.

What Happened: Huawei Technologies is escalating its efforts in semiconductor research and development by establishing a large center in Shanghai, Nikkei Asia reported on Wednesday.

This move is a direct response to the stringent U.S. export controls that have limited Huawei’s access to crucial chip-making equipment.

The new R&D facility is focused on developing lithography machines, which are essential for advanced chip production. Currently, the production of such equipment is controlled by a few global entities, including ASML from the Netherlands and Japan’s Nikon and Canon. To attract top talent to this ambitious project, Huawei is offering salaries up to double those of local competitors and has already recruited engineers with experience at leading chip tool builders and chipmakers.

As U.S. export controls tighten, affecting the job market for Chinese citizens in foreign chip companies, Huawei and other local firms are finding a larger pool of domestic talent to draw from. Despite the attractive compensation, Huawei’s work culture is described as extremely demanding, with one engineer characterizing it as “007” – working nonstop, with no days off.

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Amid these challenges, Huawei’s investment in domestic chip capabilities continues to grow. The Shanghai campus, which also includes a major chip development center and the headquarters for Huawei’s chip design unit HiSilicon, represents a significant expansion of the company’s R&D footprint. The Shanghai government has disclosed a total investment of approximately 12 billion yuan for the R&D base, which will be one of the city’s key projects for 2024.

The U.S. has been lobbying its allies to adopt similar export restrictions, which has led Chinese chipmakers to seek domestic alternatives. Huawei’s increased R&D spending, which hit a record 164.7 billion yuan in 2023, underscores its commitment to reducing reliance on foreign technology and bolstering its semiconductor supply chain.

Why It Matters: The intensification of Huawei’s semiconductor R&D in Shanghai is a direct consequence of the U.S. government’s consideration to blacklist several Chinese semiconductor firms associated with Huawei. This potential action by the Biden administration could further isolate Huawei from the global tech community.

Moreover, Huawei’s recent patent developments in semiconductor technology, specifically in self-aligned quadruple patterning (SAQP), suggest a strategic pivot to circumvent U.S. export controls on high-end lithography equipment. This innovation could potentially undermine the market dominance of companies like ASML Holding ASML.

The context of these developments is further enriched by the ongoing tussle between major chipmakers like Intel and Advanced Micro Devices over chip sales to Huawei. Despite the sanctions, Intel has managed to continue its significant chip sales to Huawei, showcasing the complex dynamics of the semiconductor market amid U.S. sanctions.

Meanwhile, Chinese chip designers, including Tencent Holdings Ltd TCEHY, actively promote their AI chips as alternatives to Nvidia NVDA products. They hope U.S. export restrictions will encourage clients to switch. 

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