Huawei is building a production line for advanced chips as part of a network of semiconductor facilities in Shenzhen that seeks to break China’s dependence on foreign technologies.
The tech giant is the key player behind three manufacturing sites in Guanlan, a district of the southern city where Huawei is based, according to multiple people familiar with the matter and visits near the locations by the Financial Times.
Satellite imagery obtained by the FT shows how the Guanlan factories, built in the same distinctive style, have been rapidly developed after construction started in 2022.
The facilities, details of which have not been reported previously, demonstrate Huawei’s ambitions to become a semiconductor leader, boosting China’s effort to challenge the US in developing technologies such as artificial intelligence.
“Huawei has embarked on an unprecedented effort to develop every part of the AI supply chain domestically from wafer fabrication equipment to model building,” said Dylan Patel, founder of chip consultancy SemiAnalysis. “We have never seen one company attempt to do everything before.”
Huawei operates one of the sites, according to people with knowledge of the matter, who said it would make its 7-nanometre smartphone and Ascend AI processors — the company’s first effort to manufacture its own high-end chips.
Two other sites completed last year are operated by chip equipment maker SiCarrier and memory-chip maker SwaySure. While Huawei denies links with the two start-ups, industry insiders said the company was connected to the groups by helping to raise investment and sharing staff and technology.
The facilities also have financial backing from the Shenzhen government, according to those with knowledge of the sites.
Huawei is involved in projects that aim to develop alternatives to technology from chip designer Nvidia, equipment maker ASML, memory-chip maker SK Hynix, and contract manufacturer Taiwan Semiconductor Manufacturing Company.
Huawei’s chip efforts accelerated after Washington imposed sanctions in 2019 and cut the company off from critical foreign technology. Its work forms part of a broader government push to localise critical components in the face of US export controls designed to stymie Chinese tech development.
“I thought that Huawei was done once the US went after it,” said a company executive. “But its ambitions have only grown, and the strides it is making have been extraordinary.”
The sites are close to fabrication plants — or foundries — operated by logic-chip makers Pengxinwei (PXW) and Shenzhen Pensun (PST) that the US government alleges are linked to Huawei.
The company has also invested in semiconductor manufacturing facilities in Shanghai, Ningbo and Qingdao, according to those with knowledge of the effort.
Some industry insiders are sceptical that Huawei can realise its lofty ambitions given its relative inexperience in semiconductor manufacturing compared with domestic and international competitors.
“This is a big project that has had a lot of state support,” said a chip investor. “But there are rival companies in China working on the same thing for decades without managing to match ASML and TSMC.”
Guanlan locals referred to sites run by SiCarrier and SwaySure as belonging to Huawei, though the tech giant has denied links to the start-ups. Industry insiders said while the companies had different shareholder bases and structures, they had other close connections.
Huawei provides early support to the start-ups by dispatching management and technical teams, helping with fundraising and, in some cases, transferring technology, according to people familiar with the developments. The association with Huawei, in turn, gives state funds the “confidence” to invest, one of the people said.
This arrangement enables state funds to invest in Huawei’s chip development plans through its network of chip start-ups, without the conglomerate itself having to take on external investment and dilute its shareholder base.
“These companies will be cut off from Huawei once they reach a certain stage of development,” said a person with knowledge of its operations. “During the process, Huawei empowers them through providing personnel, technology and systems. This helps speed up the technology iteration and improves their chances of success.”
SiCarrier was spun out of a Huawei lab with the backing of a Shenzhen state fund, according to people familiar with the matter. It was registered as a company in 2021. Bloomberg previously reported the links between Huawei and SiCarrier.
It maintained a low profile until March, when it unveiled about 30 tools including etch, testing and deposition equipment at the Semicon conference in Shanghai.
SiCarrier has several subsidiaries, including the Shanghai government-backed Yuliangsheng, which specialises in lithography technology. Former Huawei engineers lead Yuliangsheng and are developing a deep ultraviolet lithography machine, according to people with knowledge of the development. SiCarrier has not made its DUV efforts public.
A second site is operated by SwaySure, which supplies Huawei with memory chips for cars and consumer electronics.
Huawei declined to comment on detailed questions related to this article but said: “It is not factually correct to attribute all [these] Shenzhen semiconductor-related activities to Huawei. Furthermore, SiCarrier, SwaySure, UEA, PXW and PST are not affiliated with Huawei.”
SiCarrier and SwaySure did not respond to requests for comment.
The third site is Huawei’s self-operated facility, which will include manufacturing lines for its smartphone and Ascend AI chips, as well as technology related to its autonomous driving business, said two people.
SemiAnalysis said its architectural style matched those of other Huawei-affiliated foundries. Additionally, the so-called wafer bridges connecting buildings on the site’s north side and nearby utilities bear the hallmarks of a chip manufacturing facility.
Construction is due to be completed in the coming months, but it will take at least a year to start operating, as Huawei seeks to use mostly domestically made equipment that is still being tested, according to people with knowledge of the facility.
Huawei’s attempt to manufacture its own chips was prompted by its frustration at the low output of its local fabrication partner, Shanghai Manufacturing Industry Corporation.
The need for Huawei to boost fabrication capacity for the Ascend chip is more urgent after it was exposed last year for using a third-party company to circumvent sanctions to use TSMC to make its AI chips.
Many partners and rivals, including SMIC and Shanghai Micro Electronics Equipment have been drawn in to bring critical engineering expertise to Huawei’s project.
An industry insider said Huawei’s political influence meant companies were expected to assist, even when it meant helping a competitor.
SMIC has dispatched engineering teams to assist in setting up the facilities. Meanwhile, SMEE, the leading domestic provider of lithography tools, has been providing support, even after Huawei poached many of its technical staff, said two people. Both companies did not respond to a request for comment.
The US government has targeted the Huawei network. In December, Washington placed SiCarrier and SwaySure on the “entity list”, barring American companies from selling technology to them.
The government alleged they were aiding Huawei’s efforts to build advanced chip technology for military modernisation.