A few months ago, I wrote that the biggest ban the United States could exert on Huawei would not come from any product made by Google, Facebook or general Silicon Valley. Practically, Huawei can find alternatives to those solutions, even if they are sub-optimal. Yes, it can make its own mobile operating system, replacing Android. It can find some European companies like Qwant for search. In a ride together a few years ago in Casablanca Morocco, the CEO of Qwant shared his vision of “search privacy”. Yes, a search alternative that is not Google or Bing is available!
U.S. plans to restrict access of critical components into the hands of Huawei as the trade war with China intensifies, and the battle for the future of 5G technology is waged. Largely, U.S. has many tools through two vital companies in the world of microelectronics: Cadence and Synopsys. More than 99% of the leading chip designers depend on these firms. Without them, it will be hard for Huawei to make its own microchips (to overcome the bans) in ways that foundries can manufacture them effectively. If U.S. blocks Huawei, call that move extremely “severe” but not “existential”, yet, because China will respond. Simply, China can block Chinese factories from offering “labour components” for American firms like Apple, Dell, HP, etc. If that happens, iPhone may be off market!
But there are two things Huawei cannot do and cannot find solutions at the moment: semiconductors machinery, and advanced CAD tools for analog chip design. Cadence and Synopsys control the global market for the latter at more than 99%, especially for high end chip designs. While Mentor, Magma and others register on the chart, Cadence is the leader. Interestingly, the top five players are Americans.
Then on chip manufacturing, while we hail TSMC, Globalfoundries and Samsung Electronics, all of them depend on semiconductor tools supplied by American companies. Without those companies, these companies cannot operate.
So, to cripple Huawei, the U.S. recently said that no American semiconductor machinery can be used by any semiconductor foundry that does business with Huawei. Magically, nearly all foundries in the world became affected; TSMC is rumored to have dropped Huawei. If Huawei cannot get a foundry to help on its chip fabrication, it has a big challenge. At the moment, it does not have the capacity to build these factories without relying on American machinery and equipment. This is Huawei’s biggest test! With this ban, it is now an asymmetric warfare and I expect a surrender even as the UK plans to wean itself off of Huawei by 2023, on 5G.
Taiwanese Semiconductor Manufacturing Co., the world’s largest contract semiconductor maker, has stopped taking new orders from Huawei Technologies, one of its largest customers, according to the Nikkei Asian Review. The report said the decision was made to comply with new United States export controls, announced last Friday, that are meant to make it more difficult for Huawei to obtain chips produced using U.S. technology, including manufacturing equipment.
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