Huaweis life and death under pressure from the United States? Dont worry, there are variables

 Huaweis life and death under pressure from the United States? Dont worry, there are variables

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u25b3 Guo Ping, chairman in office of Huawei, delivered a speech at the 17th global analyst conference of Huawei, which opened in Shenzhen on the 18th. The picture comes from Huaweis official wechat

Recently, the U.S. again put pressure on Huawei to modify export control rules, which severely damaged Huaweis chip supply. Many media called it a life or death crisis. However, due to the 120 day buffer period, there are still variables.

Huawei: survival is the theme word

According to the announcement released by the US Department of Commerce on the evening of the 15th, Huaweis temporary supply license was extended for 90 days to August 14.

But at the same time, the U.S. upgraded chip controls on Huawei. For production equipment located outside the U.S. but listed in the U.S. business control list, the U.S. government license is required before Huawei and Hisilicon can be manufactured. This includes export, re export, and transfer to Huawei and Hisilicon (equipment in the U.S. has been restricted after May 2019).

At the 17th Huawei global analyst conference held on May 18, Guo Ping, Huaweis chairman in office, responded to the US Department of Commerces revision of Huaweis direct product rules and said: firmly opposed..

As for the impact, Guo Ping said that he was still in the process of making a specific assessment and had not made a clear judgment on the business development behind him. As an ICT equipment and terminal company, Huawei is able to do product design and integrated circuit design, but we do not have many other capabilities. We are trying to find out how to survive.

According to the report of Huaxin Research Institute, U.S. companies such as KLA, lamresearch and applied materials have a significant market share in the semiconductor equipment segment. In the global scope, chip manufacturing can not bypass American enterprises, and can not realize the de Americanization of semiconductor process lines in the short term, especially the advanced technology.

According to the report, China has not yet built chip production lines relying on fully independent equipment. As Huaweis largest OEM plant, TSMC has more than 10% American technology in the 14nm process, and it is unclear whether the American technology content in the 14nm process of SMIC is less than 10%. Once the U.S. further restricts, Huaweis chip supply will encounter serious difficulties in the short term, directly hindering the production of consumer electronics products and 5g network equipment.

The so-called upgrading of restrictive measures refers to the fact that the former US Department of Commerce stipulated that companies outside the US must use US technology for less than 25% in order to do business with Huawei, while the new regulation stipulates that even 0.1% of them must be approved by the US before doing business with Huawei, otherwise they will be subject to long-term jurisdiction and sanctions.

Huawei Hisilicons Kirin chip has caught up with Apples and Qualcomms top product lines in performance and function. According to data from research institutions, Kirin chips are shipped in large quantities on Huawei mobile phones, replacing Qualcomm chips with a share of 43.9% to become the mobile SOC with the largest market share. If TSMC, which manufactures chips for Hisilicon, can no longer manufacture chips, Huaweis mobile phone business will encounter difficulties.

Industry insiders said that China core international, Samsung and other OEM enterprises can not bypass the US equipment, and Huaweis OEM needs to be approved by the US.

So far, from chip manufacturing, to chip design EDA software, to semiconducting equipment, the United States blocked Huaweis chip supply in a drastic way.

Huawei said today that it will try its best to find solutions, and hopes that customers and suppliers will work with Huawei to eliminate the adverse effects of this discriminatory rule.

In 2019, Huawei was listed in the entity list of the US Department of Commerce on May 16. This has a great impact on Huaweis business, Guo said. In fact, Huawei didnt realize its business plan last year, about 12 billion dollars short. Although it is growing every quarter, the growth is also declining. It can be seen that it is affected. Especially Huawei is more difficult to obtain every contract than before.

For this year, Guo Ping said, survival is Huaweis current theme..

Variables brought by 120 day buffer period

Considering the huge economic impact of the measure on wafer foundry, the US Department of Commerce said it would give a 120 day buffer period to reduce the impact of the change of the regulation.

At present, Chinas foreign ministry has responded to this. China will resolutely defend the legitimate rights of its enterprises, the foreign ministry said, urging the US side to immediately stop unreasonable suppression of Chinese companies such as Huawei. In the statement, the foreign ministry also said that the trump administrations actions destroyed global manufacturing, supply chain and value chain.

Chinas Ministry of Commerce said that China firmly opposes this. The United States, using its national strength and under the pretext of the so-called national security, abusing export control and other measures to keep down and contain specific enterprises of other countries, is a violation of market principles and fair competition, a disregard for the basic rules of international trade and economic cooperation, and a serious threat to the security of the global industrial chain supply chain. This damages the interests of Chinese enterprises, American enterprises and other countries.

The Ministry of commerce also said that China urged the US side to immediately stop its wrong practices and create conditions for normal trade and cooperation among enterprises. China will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.

At present, China has not yet introduced countermeasures. According to the global times, the specific anti system options available to China include the following: including US related enterprises in Chinas list of unreliable entities, restricting or investigating US companies such as Qualcomm, Cisco and apple in accordance with laws and regulations such as the cyber security review measures and the anti monopoly law, and suspending the purchase of Boeing aircraft.

In the industry, Huaxin Research Institute believes that the implementation of the new regulations will directly inhibit the global chip manufacturing enterprises from choosing American equipment, and then turn to alternative equipment, so that many enterprises will make a choice between choosing American equipment and supplying to China, which will eventually cause substantial damage to the production of American semiconductor enterprises.

In addition, 5g, as the infrastructure of the next generation of information and communication technology, has in fact been the core area of the Sino US dispute. At present, Huaweis 5g technology is in the first echelon in the world, becoming one of the important enterprises to promote the development of 5g in China and even in the world. Excluding Huawei means that the cost of 5g network construction will increase significantly.

At present, Huawei has entered the list of 5g network equipment suppliers in dozens of countries, including the European Union. When the U.S. cuts off Huaweis semiconductor supply chain, it directly disrupts the planning of 5g network construction in many countries, which will trigger a rebound in these countries.

Cinda Securities pointed out that there is more room for mediation in the U.S. restriction plan. Relevant semiconductor manufacturers and potential terminal manufacturers affected by trade disputes will vigorously lobby the U.S. government within the time limit. Leaders of the two countries also have room for urgent consultation.

Due to the 120 day buffer period, products manufactured by TSMC before May 15 can still be delivered, and Huawei has not yet been substantially affected by the new regulations. Guo Ping also expressed confidence in finding a solution as soon as possible.

What do we do?

u25b3 the picture comes from Huaweis official wechat

In fact, the extreme pressure from the United States can only accelerate Chinas domestic substitution.

The Standing Committee of the Political Bureau of the CPC Central Committee held a meeting on May 14, which pointed out that we should give full play to the advantages of the new national system, strengthen scientific and technological innovation and technological breakthrough, and strengthen the ability to guarantee key links, areas and products. We should give full play to the advantages of the new national system, strengthen scientific and technological innovation and technological breakthrough, and strengthen the ability to guarantee key links, areas and products.

On May 15, SMIC announced that the state integrated circuit Fund II and Shanghai integrated circuit Fund II will respectively inject US $1.5 billion and US $750 million into SMIC south by 2020.

The second phase of the grand fund was established on October 22, 2019 with a registered capital of two thousand and forty-one point five Billion yuan, mainly invested in IC chip manufacturing, chip design, package testing, equipment and materials, etc. Southwest Securities expects that with the acceleration of the second phase investment of large funds, it will drive the wave of domestic semiconductor industry chain investment.

At present, in terms of design, Chinas enterprises have come to the forefront of the world, but in terms of IC design EDA software, at present, it is still basically monopolized by cadence, Synopsys and mentor, which cannot be completely replaced in the short term.

In terms of equipment, the market is highly concentrated, and the output of photolithography, CVD equipment, etching machine and PVD equipment are all concentrated in the hands of a few European, American and Japanese giants.

In terms of materials, Chinas target materials and other fields have reached the international level, but it still needs a long time to realize domestic substitution in high-end fields such as photoresist.

In terms of manufacturing, the global market is concentrated, with TSMC accounting for 50% of the market share, while the mainlands SMIC and Huahong semiconductor are among the second group. Through capital investment and talent concentration, it is possible to achieve OEM surpassing in the next decade.

In terms of sealing test, the overall strength of Chinese domestic enterprises is not bad, and they have strong competitiveness in the world. In the third quarter of 2019, the overall market share of the three companies, long power + Huatian + Tongfu, exceeded 28%, and the main competitors in the United States are only Amkor (secure).

Peng Jian, deputy director of the Radio Management Research Institute of CCID think tank, said that the extreme pressure of the United States shows that in the field of neck sticking, China will not be controlled by others unless it holds the technology in its own hands. Therefore, the development of Chinas semiconductor industry will be accelerated. But at the same time, China will not give up cooperation with international enterprises and walk out the win-win road.

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