Huawei Said to Be Building Secret Chip Network Across China to Skirt US Sanctions: Report

Huawei Technologies is building a collection of secret semiconductor-fabrication facilities across China to let the company skirt US sanctions, a Washington-based semiconductor association has warned, Bloomberg News reported on Tuesday.

The Chinese tech giant moved into chip production last year and is receiving an estimated $30 billion (roughly Rs. 248,800 crore) in state funding from the government, the Semiconductor Industry Association said, adding that Huawei has acquired at least two existing plants and is building three others.

The US Commerce Department added Huawei to its export control list in 2019 over security concerns. The company denies being a security risk.

If Huawei is constructing facilities under the names of other companies as the Semiconductor Industry Association says, then it might be able to circumvent US government restrictions to indirectly purchase American chip-making equipment, according to the Bloomberg report.

Huawei and the Semiconductor Industry Association did not immediately respond to Reuters' requests for comment.

Huawei has been placed on a trade blacklist in the United States, restricting most suppliers from shipping goods and technology to the company unless they were granted licenses. Officials have continued to tighten the controls to cut off the company's ability to buy or design the semiconductor chips that power most of its products.

Meanwhile, Huawei's smartphone business is "on the road to a comeback," the head of the company's consumer business Richard Yu said in his keynote at the company's annual developer conference in the southern city of Dongguan earlier this month. Huawei's share of the domestic smartphone market share grew by 76.1 percent in the second quarter, and took second spot in the high-end sector, Yu said.

The Chinese firm is also plotting a return to the 5G smartphone industry by the end of this year, according to research firms, signalling a comeback after a US ban on equipment sales decimated its consumer electronics business.

© Thomson Reuters 2023

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