Huawei has back-up plan for steady chip supply

HONG KONG • Huawei Technologies' chip arm HiSilicon said yesterday that it has long been prepared for the "extreme scenario" that it could be banned from purchasing US chips and technology, and is able to ensure a steady supply of most products.

HiSilicon, which mainly designs chips for Huawei equipment, made the comments in a letter to staff attributed to its president, Ms He Tingbo, shortly after the United States officially banned Huawei from buying US technology without special approval.

The ban has thrown into disarray prospects for sales at some of the largest technology companies and drawn a sharp rebuke from Beijing, further ratcheting up tensions over trade.

Huawei confirmed the authenticity of the letter seen by Reuters and published by Chinese media yesterday.

HiSilicon has been developing back-up products for years in anticipation of the unlikely scenario that Huawei may one day be unable to obtain advanced chips and technology from the US, Ms He said in the letter.

HiSilicon's efforts have ensured a steady supply and strategic safety of most products, Ms He said, adding that Huawei will aim to be technologically self-sufficient.

She described HiSilicon's efforts as a "long march in the history of technology" that would now pay off with the US' "crazy decision" that brought this "extreme and dark moment".

 
 
 

Now is the time for "all the spare tyres in the safe" to become useful, Ms He said in the letter.

Huawei has already been using chipsets called Kirin, designed by HiSilicon, in its high-end smartphones, with the manufacturing handled by so-called foundry companies such as Taiwan's TSMC. Huawei also uses some chipsets from Qualcomm and MediaTek.

In an interview with Reuters in March, Huawei's rotating chairman Eric Xu had said that the unit produced more than US$7.5 billion (S$10.3 billion) worth of chips last year. That compares with an estimated US$21 billion worth of chips that Huawei acquired from outside vendors.

A Huawei spokesman said the company will use HiSilicon products to substitute for banned American components where possible, but declined to give details.

A similar US ban on China's ZTE had almost crippled business for the smaller Huawei rival early last year before the curb was lifted.

REUTERS

 
A version of this article appeared in the print edition of The Straits Times on May 18, 2019, with the headline 'Huawei has back-up plan for steady chip supply'. Print Edition | Subscribe