"They're Trying To Get Our IP" - Congressman Slams China's SMIC For Violating Chip Sanctions

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by Tyler Durden
Wednesday, Sep 06, 2023 - 10:45 PM

The Biden administration's efforts to limit China's access to high-tech semiconductor chips and advanced machinery for supercomputing and AI have yet to be successful. There is growing frustration in Washington this week after Bloomberg revealed that Huawei Technologies Co. and China's top chipmaker, built a new smartphone using an advanced 7-nanometer processor

On Tuesday, US National Security Adviser Jake Sullivan told reporters he needs "more information" on the "character and composition" of Semiconductor Manufacturing International Corp.'s Kirin 9000s chip powering Huawei's Mate 60 Pro. Financial Times reported Sullivan was responding to a question during a briefing when a reporter asked whether US controls on exports of advanced semiconductors were being circumvented by Beijing. 

TechInsights conducted a complete teardown of the Mate 60 Pro for Bloomberg. They found that the "processor is the first to utilize SMIC's most advanced 7nm technology and suggests the Chinese government is making some headway in attempts to build a domestic chip ecosystem." 

The Mate 60 Pro is powered by a new Kirin 9000s chip that was fabricated in China by SMIC.Photographer: James Park/Bloomberg

For some context, Apple's current iPhones use 4nm chips. The introduction of new iPhone 15 models will likely be powered by 3nm next week. Even though there is a sizeable gap between Huawei's 7nm powered smartphone and Apple's 4nm, it demonstrates the possibility that sanctions have been an ineffective weapon by Washington against China. 

Dan Hutcheson, the vice-chair of TechInsights, told FT that Huawei's Mate 60 Pro "demonstrates the technical progress" the country's chip sector has made despite being limited to the latest ultraviolet lithography tools due to Western sanctions. 

Hutcheson warned the development could spark another wave of Western chip sanctions on China to "curtail China's access to critical manufacturing technologies." 

... and this development has caused a stir in Washington, as Bloomberg's Annmarie Hordern reported Wednesday morning:

When asked about whether SMIC violated trade sanctions by supplying Huawei with a new smartphone chip, @RepMcCaul said SMIC "warrants investigation" and it "looks like" they violated sanctions by supplying Huawei. SMIC continues "to try to get our intellectual property."

Meanwhile, the Global Times, a state-run communist newspaper in China, posted this meme on X, saying, "Huawei breaks free from US tech blockade." 

Ming-Chi Kuo, analyst at TF International Securities, told clients in a note that Huawei's new smartphone could revive its handheld business. 

Goldman told clients via its GS Global Equities Call this morning to "Keep an eye on AAPL today following a WSJ report that China ordered officials not to use iPhones and other foreign - branded devices for work or bring them to government offices. ( WSJ ) On this note, semi/chip names were bid overnight following introduction of a new Huawei phone sparking hopes for the domestic semiconductor industry." 

This development is an ominous sign that Washington's global arsenal of sanctions to prevent other powers from rising is failing (read: here) amid the emergence of a multi-polar world that is likely here to stay.