US Gov't Begins Probe Into Huawei's Breakthrough Chip

Huawei Technologies Co. roared back into the spotlight this past week after a Bloomberg report showed their new phone is powered by a 7-nanometer processor, which is just a few years behind Apple's iPhone. And who's getting the jitters over this new development? Those very same Capitol Hill lawmakers, who, for the last several years, sanctioned not only Huawei but also China's chip sector to stymie homegrown tech progress. That move didn't pan out as planned.

Now, the US Commerce Department is panicking while it rushes to understand how sanctioned Huawei was able to design and manufacture a 7-nanometer processor for its new Mate 60 Pro smartphone. The whole purpose of blacklisting the company and many other Chinese tech firms was to restrict access to US technology to make these sorts of devices.  

Bloomberg pointed out the Mate 60 Pro went on sale while the US Commerce Secretary Gina Raimondo was on a trip to China last week. This is a sign that China is 'thumbing their noses' at the US for the wave of sanctions that have failed so far. 

"We are working to obtain more information on the character and composition of the purported 7nm chip," a Commerce spokesperson said in a statement. 

The spokesperson continued, "Let's be clear: export controls are just one tool in the US government's toolbox to address the national security threats presented by the PRC. The restrictions in place since 2019 have knocked Huawei down and forced it to reinvent itself — at a substantial cost to the PRC government."

According to Nazak Nikakhtar, who worked as the Commerce Department's Assistant Secretary for Industry & Analysis in the Trump administration, the Commerce Department will begin its own investigation into Huawei's new phone. The Commerce Department's Office of Export Enforcement will likely lead the study to determine if China's top chipmaker, Semiconductor Manufacturing International Corp.'s Kirin 9000s chip, was made using US technology.

The Mate 60 Pro news is a sign that suggests President Xi Jinping's efforts to develop technological self-sufficiency are working. The Bloomberg report on the phone showed it has "an unusually high proportion of Chinese parts ... a sign of the country's progress in developing domestic tech capabilities." 

Meanwhile, China has banned iPhone use by central government employees and has expanded it to local governments and state-owned companies. Such curbs threaten multinationals like Apple, which derives 20% of its sales from the world's second-largest economy. 

Tom Nunlist, an associate director from the Beijing-based consulting firm Trivium, said, "Chip tech export controls may have been Washington's one and only ace in the tech war." 

One can only assume there will be more comments from Washington, like one from Representative Mike Gallagher, the chairman of the House Select Committee on Competition with China, who said, "The time has come to end all US technology exports to both Huawei and SMIC to make clear any firm that flouts US law and undermines our national security will be cut off from our technology." 

The tech war isn't over -- this will only give the Biden administration more ammo to unleash even more sanctions despite the current sanctions have not worked to stymie tech progress.