Report: Huawei, Shenzhen support creation of local foundry

Report: Huawei, Shenzhen support creation of local foundry

Business news |
By Peter Clarke

Struggling Chinese telecommunications giant Huawei is supporting the creation of a chip foundry in its home town of Shenzhen, according to a Bloomberg report.

Pengxinwei IC Manufacturing Co. Ltd., known as PXW, is run by a former Huawei executive, the report said. The company has started constructing a wafer fab close to Huawei’s headquarters and is expected to begin manufacturing circuits on a 28nm CMOS manufacturing process in 2025. PXW then plans to go on to 14nm and 7nm manufacturing processes, the report said.

The company has reportedly described itself as a contract chip supplier that aims to make chips used in cars, Internet of Things devices and phones.

Huawei has struggled for the last couple of years after being targeted by US trade sanctions and denied access to leading-edge semiconductors from the world’s leading foundry, TSMC in Taiwan. Huawei’s leading position in smartphone sales collapsed almost immediately the sanctions were applied. The US has also targeted China’s leading domestic chipmaker – Semiconductor Manufacturing International Corp. (SMIC) – denying that company access to leading-edge chip manufacturing equipment. SMIC has managed to produce chips at 14nm and close to 7nm using older unembargoed equipment.

Huawei had plans before

Support for PXW could be part of an effort to bolster Huawei’s position in telecommunications equipment, which can probably still be made for now on slightly more mature manufacturing processes. However, it will likely to do little for Huawei’s position in smartphones, which tend to use the most adavanced manufacturing process. Without access to 5nm and 3nm processes it will be almost impossible for Huawei to be competitive. It remains unclear how much of PXW’s output Huawei plans to take.

Plans for Huawei to build a 28nm production line were revealed in August 2020 as the company scrambled under the impact of the US sanctions (see Huawei is hurrying to build a wafer fab). At that time, it was trying to bring up a 45nm line in Shanghai but with a second fab targeting 28nm at an unspecified location also mentioned.

PXW has already ordered chip making equipment from foreign suppliers, according to Bloomberg, but is being monitored by the US to determine whether or not it violates US export controls, the report said.

The foundry is also being backed by the Shenzhen city government but the report did not state how much is being invested in PXW by Huawei or others.

PXW acquired a large parcel of land in the city for 158 million yuan (about US$23 million) in December 2021, the report said. Satellite images show the construction of buildings nearing completion.

Related links and articles:

Huawei is hurrying to build a wafer fab

Yangtze Memory CEO reportedly leaving post

Another China ‘Big Fund’ executive is detained

Huawei proposes vertical transistor for 3D-DRAM

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