According to the Financial Times, Huawei is rapidly constructing three semiconductor manufacturing bases in the Guanlan area of Shenzhen, one of which will be directly operated by Huawei, aimed at producing 7nm smartphone chips and Ascend series AI processors. This marks Huawei’s first foray into the high-end chip self-production sector, targeting the technological monopoly of international giants such as NVIDIA, ASML, SK Hynix, and TSMC.
Since the U.S. sanctions in 2019 cut off Huawei’s access to advanced chips, this tech giant has accelerated its layout of the entire semiconductor industry chain. This significant project has not only received financial support from the Shenzhen municipal government but has also formed an “invisible alliance” with partner companies SiCarrier and SwaySure to share technology and resources. Satellite images show that the three factories have made rapid construction progress since breaking ground in 2022, reflecting China’s urgent demand and firm determination in the semiconductor localization process.
Technical Path: Bypassing EUV Restrictions, Breakthroughs and Limitations of DUV Technology
Huawei has chosen the 7nm process as a point of technological breakthrough. Although this node is not the industry’s cutting-edge level (TSMC has already achieved mass production of 4nm processes and is planning for 1.6nm technology), it still holds significant strategic importance in the fields of AI and 5G. Due to U.S.-led export control policies prohibiting ASML from selling EUV lithography machines to China, Huawei has had to rely on DUV lithography machines and employ multiple exposure techniques to achieve the 7nm process. Previously, SMIC used this method to produce chips for Huawei’s Mate 60 Pro, but this approach has issues such as high costs, low yield, and difficulties in scaling up production.
It is noteworthy that Huawei’s factories are likely to adopt a similar technical solution to SMIC’s “modified DUV + multiple exposure” approach, combined with domestic equipment (such as Shanghai Micro Electronics’ 28nm lithography machine), gradually replacing imported equipment. However, the lack of EUV technology will severely restrict its pace of development towards more advanced processes. Moreover, the recent ban on ASML’s NXT:2050i/2100i DUV lithography machines has further complicated Huawei’s equipment acquisition.
Policy and Industry Synergy: The “Chinese Model” Under a National System
The financial injection from the Shenzhen municipal government and Huawei’s vertical integration strategy vividly illustrate the characteristics of China’s semiconductor industry development under a national system. Huawei not only builds its own wafer fabs but also vigorously supports upstream and downstream enterprises through investments and technology sharing. For instance, SwaySure focuses on memory chips, while SiCarrier specializes in equipment development, thus forming a complete industrial chain ecosystem covering chip design, manufacturing, and packaging/testing. This model is quite similar to Samsung’s “vertical integration” strategy before U.S. sanctions, with the core goal of reducing dependence on external supply chains.
Additionally, the rapid rise of Chinese memory company ChangXin Storage (expected to reach a DRAM capacity of 300,000 wafers/month by 2025) also provides strong localized supply chain support for Huawei, effectively reducing reliance on South Korean companies like SK Hynix.
Questions and Challenges: Technological Gaps and Commercialization Issues
Despite Huawei’s ambitious plans in semiconductor manufacturing, there are still many doubts about its capabilities:
- Experience Shortcomings: Huawei has primarily focused on chip design (such as the Kirin series) and lacks practical experience in wafer fab operations, while competitors like TSMC and Samsung have been deeply entrenched in this field for decades.
- Cost and Yield: The cost of DUV multiple exposure processes is 30%-50% higher than that of EUV, and there are significant challenges in improving yield, which may adversely affect the market competitiveness of the products.
- International Competitive Pressure: TSMC’s 4nm factory in the U.S. has already begun production, and it plans to launch 1.6nm technology by 2026; Intel is also accelerating its 14A process to regain its leading position in manufacturing technology.
Global Impact: Restructuring the Semiconductor Geopolitical Landscape
If Huawei’s self-sufficiency attempts succeed, it will significantly shake the U.S.-dominated semiconductor technological hegemony. Its Ascend 910D chip is positioned against NVIDIA’s H100, and if performance meets expectations, it will greatly alleviate China’s AI industry’s dependence on U.S. technology. In the long run, China is expected to form a “DUV + domestic equipment + self-developed processes” alternative path, standing in competition with the EUV technology system dominated by the West.
However, this process is fraught with risks and challenges: the U.S. may further escalate sanctions, restricting the supply of critical materials (such as photoresists); the patent barriers of technology oligopolies like ASML may also become significant obstacles to Huawei’s development. Whether Huawei can find the best balance between technological breakthroughs and commercialization will directly determine the future direction of China’s semiconductor industry.