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Huawei's Technological Advancements in 2024 Amid US Sanctions

GOOVER DAILY REPORT June 26, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Introduction of New Huawei Technologies in 2024
  3. Breakthroughs in Chip Technology
  4. Impact of US Sanctions and Export Controls
  5. State Support and Government Collaboration
  6. Huawei's Market Performance and Consumer Reception
  7. Conclusion

1. Summary

  • This report examines Huawei's significant technological strides in 2024, achieved despite rigorous US sanctions. It showcases notable developments in smartphones and chip technology, made possible through collaborations with key Chinese entities such as SMIC. The report details the new launches of advanced devices like the Pura 70 series and MateBook 14 2024, emphasizing their state-of-the-art features. Additionally, it explores Huawei's breakthroughs in chip technology, facilitated by innovations like the Kirin 9010 processor and the adoption of self-aligned quadruple patterning (SAQP) and deep ultraviolet lithography (DUV). The report also highlights the crucial role of the Chinese government's support in Huawei's progress, from financial aid to promoting domestic semiconductor production. Finally, it covers Huawei’s market performance, spotlighting significant increases in sales and consumer confidence, underlining the company's resilience despite international trade restrictions.

2. Introduction of New Huawei Technologies in 2024

  • 2-1. Huawei's latest smartphones with advanced chips

  • In 2024, Huawei introduced several new smartphones featuring advanced chip technology. Despite stringent US sanctions on China's semiconductor industry, Huawei, in collaboration with Chinese firms such as SMIC, managed to produce cutting-edge devices. This included the launch of smartphones powered by sophisticated chips, continuing its push for technological innovation.

  • 2-2. Launch of Pura 70 series

  • Among the notable releases was the Pura 70 series. These devices represented a significant leap in Huawei's smartphone capabilities, integrating next-generation chip technology. This launch exemplifies how Huawei continues to advance its product line despite international trade restrictions.

  • 2-3. MateBook 14 2024 features

  • The MateBook 14 2024 also debuted in the market, showcasing Huawei's advancements in laptop technology. The device boasted new features and enhanced performance made possible through the integration of advanced semiconductors. Leveraging its technological know-how, Huawei has delivered a competitive laptop amid ongoing US sanctions.

3. Breakthroughs in Chip Technology

  • 3-1. Collaboration with SMIC

  • Huawei’s collaboration with the Semiconductor Manufacturing International Corporation (SMIC) has been pivotal in advancing its chip technology. SMIC, the third-largest foundry in the world, has developed the capability to manufacture 5nm chips using older ultraviolet lithography machines. This collaboration has enabled Huawei to overcome the obstacles posed by US sanctions.

  • 3-2. Development of Advanced Processors like Kirin 9010

  • Huawei has made significant strides in the development of advanced processors, such as the Kirin 9010. This processor is built using advanced manufacturing techniques, enabling higher performance and efficiency in Huawei’s devices. The Kirin 9010 showcases Huawei’s capability to innovate despite external pressures.

  • 3-3. Utilization of Self-Aligned Quadruple Patterning (SAQP)

  • The utilization of self-aligned quadruple patterning (SAQP) has been a crucial factor in Huawei's ability to produce smaller and more efficient transistors. This technology allows for the creation of finer patterns on silicon wafers, which is essential for developing advanced chips. By employing SAQP, Huawei has been able to enhance the processing power and energy efficiency of its devices.

  • 3-4. Adoption of Deep Ultraviolet Lithography (DUV)

  • Huawei has adopted deep ultraviolet lithography (DUV) in its chip manufacturing process. DUV lithography is a critical technology that enables the production of high-resolution patterns on chips. By using DUV, Huawei can manufacture sophisticated and highly integrated chips, ensuring that its smartphones and other devices remain competitive in the market.

4. Impact of US Sanctions and Export Controls

  • 4-1. US Efforts to Restrict Chipmaking Equipment to China

  • The United States has been aggressively seeking to curb China's ability to manufacture cutting-edge semiconductors. This initiative includes persuading allies, such as the Netherlands and Japan, to restrict the export of chipmaking equipment to China. In 2023, the US successfully brokered an agreement with these countries to limit the shipment of advanced chips and equipment to China. Specific restrictions include Japan’s curbing of exports from companies like Nikon Corp and Tokyo Electron, and the Dutch government regulating ASML’s deep ultraviolet (DUV) machines that contain US components. The US aims to expand these restrictions to include eleven more Chinese factories on the restricted list, including SMIC, China’s largest chipmaker.

  • 4-2. US Sanctions on Huawei Affecting Access to Technologies

  • The US has imposed comprehensive sanctions on Huawei, restricting its access to essential technologies. These sanctions have targeted not only US firms but also international companies that supply Huawei. Despite these constraints, Huawei managed to develop the Mate 60 Pro, a high-impact smartphone, which symbolizes China's resilient technological advancements. The plight of Huawei highlights the broader impact of US sanctions aimed at stifling China's technological progress by restricting access to critical semiconductor processes and equipment.

  • 4-3. Response from the Chinese Government and Local Companies

  • In response to US sanctions, the Chinese government and local companies, particularly SMIC, have taken decisive steps to bolster their semiconductor capabilities. China's semiconductor production surged by 40% in the first quarter of 2024, reaching 98 billion units, driven by high domestic demand and increased chipmaking capacity. SMIC has successfully mass-produced Huawei’s Mate 60 Pro using second-generation 7-nanometer technology, despite the US restrictions. These achievements underscore China's intensified efforts and increased government funding to achieve self-reliance in semiconductor manufacturing and reduce dependence on foreign technology. The unintended effect of US sanctions has been to catalyze China's strategic investments in advancing its semiconductor technology.

5. State Support and Government Collaboration

  • 5-1. Financial Aid and Tax Breaks from the Chinese Government

  • The Chinese government has provided substantial financial aid and tax breaks to support Huawei. This has been a crucial factor in ensuring the company remains competitive in the face of stringent US sanctions. The financial support allows Huawei to continue investing in research and development, thus maintaining its technological edge.

  • 5-2. Policies Promoting Domestic Semiconductor Production

  • Chinese government policies have strongly promoted domestic semiconductor production. Despite US export controls designed to curb China's access to advanced semiconductor technologies, China has made significant strides in semiconductor production. For instance, reports indicate that China produced a record 36 billion semiconductor units in March 2024. This increase is partly due to government policies encouraging the expansion of semiconductor plants across the country.

  • 5-3. Partnership with State-Backed Enterprises like SMIC

  • Huawei has strategically partnered with state-backed enterprises, such as Semiconductor Manufacturing International Corporation (SMIC). This collaboration has been instrumental in achieving technological breakthroughs, like the production of Huawei's Mate 60 Pro smartphone using second-generation 7-nanometer process technology. SMIC's role in mass-producing advanced semiconductors has been a key driver of Huawei's technological advancements amid international trade restrictions.

6. Huawei's Market Performance and Consumer Reception

  • 6-1. Sales increase of Mate 60 Pro and Pura 70

  • In 2024, Huawei experienced a significant surge in sales for its Mate 60 Pro smartphones. The company reported that sales of its premium devices rose by 72% during the first five months of the year, following the launch of the Mate 60 Pro in September. This increase in sales is noteworthy considering the stringent U.S. sanctions that have restricted Huawei's access to modern U.S. technologies. Despite these sanctions, the Mate 60 Pro has been well-received in the Chinese market, contributing substantially to Huawei's commercial success.

  • 6-2. Consumer confidence in Huawei products

  • Huawei has reached 900 million active consumer devices with its HarmonyOS operating system, demonstrating significant consumer confidence in its products despite the challenges posed by U.S. sanctions. The company has been able to maintain and even grow its consumer base through strategic use of HarmonyOS across a range of devices, including smartphones, watches, and TVs. This growth in consumer confidence has been a critical factor in Huawei's market performance.

  • 6-3. Commercial success and profit margins

  • Huawei's commercial success in 2024 has been marked by substantial profit margins and revenue growth. In the first quarter, the company reported a net profit of 19.6 billion yuan ($2.7 million), reflecting a 564% increase from the previous year. Additionally, sales during the same period rose by 37% to 178.8 billion yuan. These figures underscore Huawei's resilience and ability to generate significant financial returns despite the ongoing U.S. sanctions. The company's collaboration with top Chinese chipmaker SMIC, especially in developing the Kirin 9000s chip, has also played a vital role in sustaining its profitability and technological advancements.

7. Conclusion

  • The report underscores Huawei's remarkable ability to thrive and innovate in 2024 despite severe US sanctions. The collaborative efforts with SMIC have been pivotal in advancing Huawei's chip technology, enabling the production of sophisticated devices under international trade restrictions. Support from the Chinese government, including financial aid and policies encouraging semiconductor production, has significantly contributed to Huawei's resilience. However, the ongoing US-China technological rivalry and associated regulatory measures will continue to impact this landscape. These dynamics present both challenges and opportunities, necessitating strategic navigation by stakeholders. Future developments should focus on further advancing technological capabilities while mitigating the impacts of external trade restrictions. Huawei's ability to maintain high consumer confidence and robust market performance highlights its potential for continued success and innovation in the rapidly evolving global tech sector.

8. Glossary

  • 8-1. Huawei [Company]

  • Huawei is a leading Chinese technology company that has made significant advancements in smartphones, chip technology, laptops, and more, despite facing stringent US sanctions. The company's innovations showcase its resilience and ability to maintain competitiveness in the global market.

  • 8-2. SMIC (Semiconductor Manufacturing International Corp) [Company]

  • SMIC is a key partner of Huawei in the production of advanced chips. Their collaboration highlights China's push for technological self-sufficiency amidst international trade restrictions.

  • 8-3. Pura 70 Series [Product]

  • Huawei's Pura 70 series of smartphones represents a significant innovation, challenging market leaders like Apple in China. It features advanced chips and highlights Huawei's commitment to pushing technological boundaries.

  • 8-4. Kirin 9010 Processor [Technology]

  • The Kirin 9010 is an advanced processor developed by Huawei in collaboration with SMIC. It features cutting-edge technology and is used in Huawei's latest smartphones, signifying a major breakthrough in chip technology.

  • 8-5. Chinese Government [Entity]

  • The Chinese government has provided substantial support to Huawei through financial aid, tax breaks, and policies aimed at promoting technological self-sufficiency. This partnership has been crucial in enabling Huawei's continued innovation and market success.

9. Source Documents