Since 2019, Huawei Technologies, one of China’s largest telecom companies, has faced serious challenges after the U.S. government imposed strict sanctions. These sanctions cut off the company’s access to important American technology and markets, making it very difficult for the company to get advanced computer chips and key parts needed for its devices.
Huawei’s Fight to Build Its Own Chip Supply Chain
In response, Huawei created a special investment company called Hubble in 2019. Through Hubble, it has invested in more than 60 Chinese companies involved in chip design, manufacturing, materials, and testing. These companies range from small startups to more established businesses, each playing a part in building a homegrown supply chain.
Huawei often takes small stakes—usually less than 10%—in these firms. The goal is to guide and encourage them to develop technology and products that meet their needs. The company wants to control its supply chain fully to avoid reliance on foreign technology.
Among the companies Huawei supports is Suzhou Carbon Semiconductor Technology, which makes wafers using carbon nanotubes. These wafers perform better than traditional silicon ones and are essential for building high-performance chips.
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Another important company is Huahai Chengke New Material, producing special packaging materials needed for high-bandwidth memory chips used in artificial intelligence applications.
Besides Hubble’s investments, Huawei has a close relationship with SiCarrier, a Shenzhen-based chip equipment maker. SiCarrier specializes in manufacturing machines used in the early steps of chip production, such as creating fine circuits on wafers. This company used to be a division of Huawei but became independent after U.S. sanctions were imposed. Now it is controlled by the Shenzhen city government but continues to work closely with Huawei.
SiCarrier is building several large factories in Shenzhen and has plans to raise billions of dollars to expand. The company is reportedly developing lithography equipment, which is crucial for making smaller, more advanced chips.
The Impact of U.S. Sanctions and Huawei’s Progress
The U.S. sanctions stopped Huawei from working with global leaders like Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest and most advanced chip maker. Without access to TSMC’s cutting-edge technology, the company had to turn to Chinese chip manufacturers like Semiconductor Manufacturing International Corporation (SMIC).
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However, SMIC faces its own challenges because it cannot obtain the most advanced equipment needed to make the tiniest, most powerful chips due to export restrictions. Despite this, Huawei has pushed forward, designing its own chips through its subsidiary HiSilicon and having them manufactured by SMIC and others in China.
Huawei has managed to develop 7-nanometer chips and is working on even more advanced 5-nanometer ones, which are expected to be used in new its laptops. (A nanometer is a unit that measures how small the parts inside a chip are—the smaller, the better the performance.) Still, experts say Huawei’s products may not match the precision and efficiency of those made by companies with full access to the latest technology.
Building a chip supply chain in China requires huge investments. Huawei’s efforts have led to financial losses; for example, the company reported a net loss of about $56 million in the last quarter of 2024. The high costs of developing and producing chips likely contributed to this.
While Huawei works on independence, other Chinese companies like Xiaomi have announced plans to release devices with 3-nanometer chips designed in-house. However, Xiaomi still relies on TSMC to manufacture those, meaning it has not yet achieved the full self-sufficiency Huawei is striving for.
