Huawei sold out its inventory of the phone, which costs about $1500, almost immediately, suggesting the inventory was quite limited and leading to speculation that the technology might not have been completely home grown.
In the lead up to the Trump administration’s initial sanctions on the company in 2019, Huawei stockpiled as many advanced chips from TMSC and other overseas suppliers as it could. It is possible Huawei used what’s left of those chips, with some modifications and new packaging, for the new phone.
It is also known to have set up a network of secret semiconductor factories within China in response to its sanctions, which may have given it access to chips manufactured offshore before the more recent general sanctions on all exports of advanced chips to China was announced by the Biden administration. The sanctions apply to any chips or chip-making equipment where there has been US input into the process.
Western tech experts have moved quickly to take apart and investigate the phone.Credit: Bloomberg
Given the complex geography of the supply chains for semiconductors, that has effectively cut China’s access to technologies from all US allies, including key centres like Japan and South Korea.
The US, with some help from the European Commission, also caused the Netherlands to shut down China’s access to the only machines, built by the Dutch company ASML, that manufacture the most advanced chips.
If China has been able to produce a chip, designed and manufactured entirely within China, with performance characteristics similar to those of 5 nanometre chips (probably using a more expensive and time-consuming multi-patterning technique of exposing the silicon wafers to light multiple times rather than once), it would be a breakthrough even if it still leaves China about five years behind the moving target of the leading-edge Western chips.
The launch set off a scramble by Western technology experts to unravel the mysteries around the phone’s capabilities and a guessing game over how Huawei was able to develop the advanced semiconductors that power the new devices.
It was certainly hailed as that by China’s state-owned media, which declared that it showed the US sanctions and its efforts to contain China’s technological development had failed, with the Global Times saying it proved that “US extreme suppression” had failed and that the phone “serves as a microcosm of the US-China tech war, reflecting the entire process and foreshadowing the final outcome.”
Huawei itself described the achievement as “breaking through the blockade.”
Huawei was once, briefly, the world’s leading manufacturer of smartphones but its consumer division was nearly destroyed by the US sanctions, with its revenues halved. It now has a global market share in the low single digits, with its domestic market share less than 10 per cent.
Even if it can mass produce the Mate 60 Pro in substantial volumes, it probably isn’t going to regain its former heights but it could win back a much more significant slice of its domestic market.
The earlier-than-scheduled release of Huawei’s Mate 60 Pro came as US commerce secretary Gina Raimondo was visiting China. She is pictured with Chinese Vice Premier He Lifeng last week in Beijing.Credit: AP
For the US, the phone’s release and its apparent capabilities will cause a review of the efficacy of its sanctions, which may be having the perverse effects of creating incentives for China to develop itself the very technologies that the US is trying to deny it access to. That’s what the Global Times was referring to when it said the launch of the phone foreshadowed the final outcome – China’s technological independence.
The sanctions are designed to prevent China from being able to manufacture domestically, or buy from offshore suppliers, the advanced chips that are essential for key 21st century technologies like artificial intelligence or big data – which have both commercial and military applications.
The US may have underestimated China’s determination and ability to innovate and its willingness to pour hundreds of billions of dollars into the effort. It’s also conceivable, however, that the way the layers of sanctions on Huawei and China’s technology sector more generally have been phased in over the past four years means that their full effect has yet to be felt.
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The lack of information about the Huawei phone’s components and capabilities will quickly be resolved as Western tech experts pull it apart and analyse what Huawei’s chip designers and engineers have done.
If their conclusion is that the phone does represent a breakthrough and that China’s semiconductor manufacturing capabilities are advancing at a rate that will eventually threaten US supremacy, the US may have to revisit its sanctions and broaden and strengthen them yet again.
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