Huawei reportedly bets on Shanghai chip plant to overcome US trade ban

It wouldn't help the company's phone business, however.

Huawei might have a way to avoid some of the worst consequences of tightening US trade restrictions, provided it’s willing to be patient. Financial Times sources claim Huawei is planning a dedicated chip factory in Shanghai that would make parts for its core telecom infrastructure business. It would be run by a partner, the city-backed Shanghai IC R&D Center, and would be considered experimental until it’s ready to make chips Huawei can use.

The plant would start by making chips based on a very old 45-nanometer process before moving to 28nm chips by late 2021. That would be advanced enough to make chips for smart TVs and Internet of Things devices, the tipsters said. It would reach 20nm by late 2022, when it could make “most” of its 5G cellular hardware.

Between this and a stockpile of chips, Huawei could theoretically keep its telecom hardware business running with relatively little disruption. While its chips from 2021 onward might lag behind international rivals, they could be good enough for the domestic market until Huawei can further improve its designs.

Huawei and the IC R&D Center both declined to comment to FT, with the research firm calling the matter “rather sensitive.”

Huawei might not have to worry about its long-term future if reports are accurate. As you may have noticed, though, there’s no mention of phones in this plan. Mobile devices need highly advanced chip processes to remain competitive at the high end (the Kirin 9000 in the Mate 40 Pro is a 5nm chip), and the reported Shanghai plans wouldn’t help. Huawei can turn to fabrication allies like SMIC for more modest phone chips, but it’s still likely to scale back its phone offerings once their existing supplies dry up.