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Huawei May Have Breached U.S. Chip Ban with Purchases From ASML

Huawei launched its new Mate 60 Pro smartphone in September, using what appears to a 7nm processor in the phone. The processor, called the Kirin 9000S, was apparently manufactured by China’s SMIC foundry (although SMIC denies producing the chip). The launch came after the U.S. enacted high-tech sanctions on China, attempting to restrict trade that would give China access to high-end computer chips.

Huawei likely acquired key equipment from Dutch firm ASML enabling production of the 7nm chips. According to one estimate, China’s purchases from ASML over the past two years may have exceeded 120 DUV lithography machines, exceeding the capacity of Taiwanese rival chip foundry TSMC. With 120 DUV systems but no extreme ultraviolet lithography (EUV) system, SMIC would be able to approximate a 7nm process via multiple exposures, albeit with 50% lower yields than would be possible with the use of EUV. Still, this could enable production of between 50,000 and 60,000 7nm wafers monthly, critical for Huawei’s smartphone business and China’s drive to achieve “chip independence.”

Before the U.S.’s broader chip sanctions were in place, Huawei acquired significant DUV capacity from ASML, accounting for 18-25% of ASML’s sales. ASML’s recent sales to Huawei may be in violation of the current U.S. trade sanctions. Although Huawei has made progress in the direction of self-sufficiency, it still has a long way to go before achieving fully self-reliance in semiconductor manufacturing.

Huawei’s large DUV stockpile, combined with the nationalist buzz in Chinese media regarding the Mate 60 Pro, could drive sales to 70 million units despite high costs. This would represent a major win for China. Even if ASML’s DUV sales are blocked, Huawei has gained breathing room to advance domestic production within China. Acquiring EUV systems would be an even bigger win for Huawei.

Source: United Daily News (Taiwan), October 16, 2023