The partnership with ST began in 2019 and will provide Huawei with components and access to the software necessary to develop leading-edge chips, the report states referencing unnamed sources.
Although some observers have assumed this is part of a Huawei strategy to protect itself from possible increased curbs on chip exports to China (see US reconsiders restricting China’s chip supply), any such effect is likely to be marginal at best.
One factor is that the deal predates the latest round of pressure from the US. But more importantly, any and all manufacturers of leading-edge chips would almost certainly be constrained by, and comply with, a US-dictated embargo on exports to China/Huawei. Therefore Huawei’s defence, such as it is, consists of engagement with multiple partners in its own immediate best interest and with the by-product of increasing the number of entities with a vested interest in Huawei’s success.
Although ST is a capable designer of chips it is no longer at the leading edge of digital chip manufacturing. It has been fab-lite for many years. For leading-edge digital chips ST itself contracts out manufacturing to Huawei’s partner TSMC, or to Globalfoundries or Samsung. All of these leading-edge chipmakers would likely be caught in a US-imposed enhanced restriction on exports.
What ST does bring is design expertise in things like autonomous driving and AI where it has been a long-time partner with, amongst others, Mobileye, now owned by Intel. The deal shows that Huawei is serious about having a domestic solution for autonomous driving and not relying on western chips.
Where Huawei’s interest may focus on sensors for mobile phones, ST could be the manufacturer but the European company would also be unlikely to deliberately flout tightened rules and in any case could not replace TSMC or Samsung as a supplier of critical chips.
Next: Defence by diversity
It is notable that Huawei has said it could buy chips from Samsung (see Huawei stockpiling chips, expecting tighter US sanctions); that TSMC has said it is considering spending billions of dollars on a wafer fab in the US (Analysis: TSMC ponders US wafer fab while awaiting trade rule changes); and Huawei itself has said it could put a chip-making lab down in Cambridge, England (see Huawei plans to build chip R&D facility in Cambridge).
These are all examples of a defence by diversity that helps build a consensus in favour of allowing Huawei to participate in global trade. This is a consensus that largely exists in the semiconductor industry if not in the White House (see Semiconductor industry pushes back against US export controls).
The news of the deal with ST comes as Huawei competes more succesfully in the domestic smartphone market and its HiSilicon semiconductor subsidiary has outsold Qualcomm in China, according to a report from CINNO Research. The report states that HiSilicon was the top seller of smartphone processors in 1Q20 in China at 22.2 million, representing a 43.9 percent market share. Qualcomm’s share fell to 32.8 percent – or 16.6 million processors – from a market-leading 48.1 percent in the same quarter a year before.
Huawei’s success may tempt the White House to take a tougher stance, but the semiconductor sector knows that Huawei is most of the way out the stable, and it is not the only horse that would be hurt by a banging stable door.
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