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Huawei’s in -house HiSilicon unit designed the powerful 5nm Kirin 9000 chipset that powers the company’s top flagship phone ( Mate 40 series ) and the 5G base station used for 5G network hardware . Unfortunately, the US Department of Commerce changed an export rule that prevents any foundry from sending any chips made using US-sourced technology to Huawei . As a result, Huawei was not able to get enough high-end components. For example, 5nm Kirin had ordered 15 million of its 9000 SoCs, but only 8.8 million of them were delivered to Huawei.

Huawei turned to SMIC, China’s largest foundry, but its latest technology stuck at 14 nm compared to the 5nm process used by TSMC, this was not a viable scheme. Even worse, the Chinese foundry was added to the US Department of Commerce’s Asset List last week. This means that SMIC cannot buy parts from the US supply chain without a license. Two US lawmakers say new rules against SMIC need to be further tightened to prevent SMIC from seizing advanced US technology . Huawei’s placement on the Asset List in May 2019 prevents the Chinese manufacturer from purchasing components from the US supply chain, including Google.

In a letter, Senator Rubio and Congressman McCaul wrote to SMIC that the Asset List should be stricter and rewritten to close the dangerous loopholes that would allow almost all sales to continue without restrictions . The lawmakers said in their letters that they were concerned that the Wealth List rules would be completely ineffective in addressing this growing national security threat if not changed . 

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SMIC said that if placed on a blacklist that prevents it from purchasing equipment from certain suppliers, it would negatively impact its R&D as it plans to develop manufacturing facilities using 10 nm processors and even more advanced nodes. SMIC also said last week that it does not believe that being placed on the Asset List will have a major negative impact on operations and financing in the short term.

If SMIC can produce using more modern compute nodes, it could lead to a major change in the global chip market. It could also prevent the US from stopping Huawei from challenging Samsung as the world’s top smartphone maker .

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