China’s chip industry will be “reborn” as a result of US sanctions, he said Eric Xurotating president of Huawei in the announcement of the company’s quarterly results and breakthrough in semiconductor design technology.
Xu spoke strongly against Washington’s technology export restrictions on China, which have inevitably hurt the Chinese tech giant’s financial performance.
“I believe that China’s semiconductor industry will be reborn under US sanctions and build a very strong and self-sufficient industry,” Xu said.
Semiconductors are the sticking point in the fierce battle between the US and China for technological supremacy. In recent years, Washington has attempted to shut China and Chinese businesses out through sanctions and export restrictions.
US-China semiconductor war
Recall that in 2019 at the time of the Trump administration, Huawei was included in the US blacklist called the “Entity List”, which prevented American companies from selling technology to Chinese society. These were chips for 5G products, where 5G refers to super-fast next-generation mobile networks. Chip restrictions against Huawei were tightened in 2020 and effectively prevented it from accessing cutting-edge chips needed for smartphone manufacturing.
Washington introduced more blanket restrictions on chips last year with the aim of depriving Chinese companies of critical semiconductors that could serve artificial intelligence and more advanced applications.
The reason cited by the Biden administration is that China may be using advanced semiconductors for military purposes.
As China’s chip industry depends on American technology at present, Chinese companies are still unable to keep up with the giants in the United States, Taiwan, Japan, and South Korea.
Not surprisingly, in recent years, China has made giant strides in terms of self-sufficiency, which remains a priority in the technological war with the United States.
Huawei’s numbers
For 2022 Huawei has registered a net profit of 35.6 billion yuan (approximately $5.2 billion) or an annual decline of 68.7%, the largest ever scored by the company of Shenzhen after the US tightening on hi-tech exports. The group, in a note, also complained that the increase in raw material prices, the Chinese restrictions related to the Covid pandemic and a one-off related to the sale of Honor were factors in the decline in profits.
From April 1, Meng Wanzhoucurrent CFO of the company and at the center of the diplomatic standoff between the US and China after his arrest in Vancouver, will hold the position of president on a rotating basis for six months.
The technological breakthrough
Last week, Chinese media reported that Xu in a speech said that Huawei and other Chinese companies have jointly created electronic chip design tools needed to make semiconductors 14 nanometers in size or larger. Xu said these tools will be verified this year, which would allow them to be used.
Xu added that those tools “will mean very little” to Huawei’s business. Huawei needs much smaller nano-sized chips for more advanced applications, which they currently struggle to obtain. The company is still recovering from the effects of the US sanctions. Not surprisingly, he said today that net income fell 69% year over year in 2022, marking the largest decline in the company’s history.