Inside China Tech: are the chips down for Huawei

Inside China, The world’s largest telecommunications equipment vendor has stockpiled chips for its 5G base stations to last until the first half of next year

Inside-China-Tec-are-the-ch

Chinese chip foundry Semiconductor Manufacturing International Corp may become a major supplier for Huawei

Despite recent moves by China to achieve greater self-sufficiency in strategic areas of technology, semiconductor design and production remains a complex industry that requires decades of research and development to advance. Meanwhile, the US just turned up the heat.

Reporters Che Pan and Celia Chen examined whether China’s fledgling semiconductor industry can rescue Huawei Technologies, the world’s largest telecommunications equipment supplier, from tighter US sanctions.

Last month, the Trump administration expanded its sanctions against Huawei by requiring foreign chip makers that use US technology to apply for a licence to sell chips to the China’s largest technology company. That vastly expanded Washington’s reach by bringing under its remit Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chip maker and key Huawei supplier.

“Huawei has no domestic substitutes for chip making in the short term,” said a Shanghai-based economist, who requested anonymity because of the sensitive nature of the topic. “It would take not only money, but require joint efforts of generations of engineers and scientists slogging away at basic scientific research to make progress in the semiconductor sector.”

Shenzhen-based Huawei’s immediate priority, according to other analysts, is to make the most of a 120-day grace period until September to stock up on certain strategic inventory, following a similar move the company used after it was put on the US trade blacklist in May last year.

Eric Tseng, chief executive at Taiwan-based semiconductor research firm Isaiah Capital & Research, said there were signs that Huawei had stockpiled enough chips for its 5G base stations to last until the first half of 2021.

interesting reading:  Intelligent Tap in Malawi Provides Water Automatically

The Trump administration’s expanded sanctions against Huawei Technologies has forced the Chinese telecommunications gear maker to stockpile more chips for its 5G network equipment business. Photo: ReutersThe Trump administration’s expanded sanctions against Huawei Technologies has forced the Chinese telecommunications gear maker to stockpile more chips for its 5G network equipment business. Photo: Reuters

The Trump administration’s expanded sanctions against Huawei Technologies has forced the Chinese telecommunications gear maker to stockpile more chips for its 5G network equipment business. Photo: Reuters

Hello, This is Bien Perez from the South China Morning Post’s Technology desk, with a wrap of our leading stories this week.

Despite recent moves by China to achieve greater self-sufficiency in strategic areas of technology, semiconductor design and production remains a complex industry that requires decades of research and development to advance. Meanwhile, the US just turned up the heat.

Reporters Che Pan and Celia Chen examined whether China’s fledgling semiconductor industry can rescue Huawei Technologies, the world’s largest telecommunications equipment supplier, from tighter US sanctions.

Last month, the Trump administration expanded its sanctions against Huawei by requiring foreign chip makers that use US technology to apply for a licence to sell chips to the China’s largest technology company. That vastly expanded Washington’s reach by bringing under its remit Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chip maker and key Huawei supplier.

“Huawei has no domestic substitutes for chip making in the short term,” said a Shanghai-based economist, who requested anonymity because of the sensitive nature of the topic. “It would take not only money, but require joint efforts of generations of engineers and scientists slogging away at basic scientific research to make progress in the semiconductor sector.”

Shenzhen-based Huawei’s immediate priority, according to other analysts, is to make the most of a 120-day grace period until September to stock up on certain strategic inventory, following a similar move the company used after it was put on the US trade blacklist in May last year.

Eric Tseng, chief executive at Taiwan-based semiconductor research firm Isaiah Capital & Research, said there were signs that Huawei had stockpiled enough chips for its 5G base stations to last until the first half of 2021.

interesting reading:  Australian digital SLR 2020 issue has landed

He indicated that Huawei’s short-to-medium term plan was to switch from TSMC to the mainland’s biggest chip foundry, Shanghai-based Semiconductor Manufacturing International Corp, for supply of low-end chips.

“Regarding high-end smartphone chips and 5G chips, domestic substitutes are unlikely to provide any meaningful help before the year 2023,” Tseng said.

Still, it is too soon to write China off.

While throwing money at China’s semiconductor problem is not a perfect solution, some experts say it could shift the dial. “Talent and people are crucial for this sector,” said Chai Jie, manager of Chengdu-based Ultra Pure Applied Materials, which is a supplier to TSMC. “One or two geniuses could make a breakthrough. That’s why state-led investment is significant for advancing this industry.”

Kuaishou chooses Chengdu for live-streaming headquarters

Chinese short video app operator Kuaishou said it will invest 3 billion yuan (US$424 million) to build its live-streaming e-commerce headquarters in Chengdu, capital of southwestern Sichuan province, amid the breakthrough success of live streams in online sales in the wake of the coronavirus crisis.

Tencent Holdings-backed Kuaishou plans to build its live-streaming ecosystem, including 5G-based assets and short video incubator programme, in the Chengdu Hi-tech Industrial Development Zone, according to a company statement on Wednesday.

“We will … give full play to the advantages of technology, products and platforms to attract multichannel network institutions, well-known celebrities and brands to jointly build a good live broadcast e-commerce ecosystem,” said Yu Haibo, senior vice-president at Kuaishou.

Live streaming e-commerce continues to rise in China as a growing number of traditional merchants move their marketing campaigns online, following countrywide lockdowns and social distancing measures imposed during the Covid-19 pandemic.

Calling Hong Kong: Hutchison Telecom sees 5G ramping up

The stakes are high for governments and telecommunications network operators around the world to foster 5G adoption, as part of efforts to help revive a global economy damaged by the Covid-19 outbreak.

That initiative has become crucial in Hong Kong, which slipped into a recession in October last year because of the disruptions caused by anti-government protests and suffered its worst economic decline on record in the March quarter amid the coronavirus crisis.

interesting reading:  Tencent’s Profit Rises To 89% By A Blockbuster Game

Kenny Koo, chief executive of Hutchison Telecommunications Hong Kong, told the South China Morning Post that a government subsidy scheme, new enterprise applications and the next iPhone are expected to give a boost to the adoption of 5G mobile services in Hong Kong. The company runs 3 Hong Kong, the city’s second-largest mobile network operator.

“We’ve aimed to deliver full coverage in Hong Kong within this year. This remains our objective, as we push forward with the first phase of our roll-out,” Koo said. He added that 3 Hong Kong is “still trying to educate the market about this superfast service, which is more than 10 times faster than 4G”.

3 Hong Kong has drawn up a range of 5G-enabled enterprise services, including live-streaming with 4K digital resolution, to businesses – especially those applying for funds through the “Subsidy Scheme for Encouraging Early Deployment of 5G”, which was introduced in May by the Office of the Communications Authority (Ofca).

“We expect the government subsidy scheme to help accelerate adoption of 5G in Hong Kong,” Koo said. The company is already working with the Hong Kong Chinese Orchestra, which has applied to the programme.

The scheme will subsidise 50 per cent of an approved 5G project’s total cost, subject to a cap of HK$500,000 (US$65,000), according to Ofca, which plans to subsidise around 100 projects. As of June 14, three applications have been approved out of 81 submissions received by the regulator.

In terms of broader consumer adoption of 5G, Koo indicated that the release of Apple’s 5G iPhone would spark much interest in Hong Kong. That is especially true for 3 Hong Kong, which was the first mobile network operator in the city to resell the iPhone in 2008. Koo said that early initiative helped the operator maintain a large percentage of iPhone users as customers.

This news was originally published at scmp.com

Leave a Reply

Your email address will not be published. Required fields are marked *

Captcha loading...