WHY THIS MATTERS IN BRIEF
When it comes to advanced computer chips china doesn’t have the fabs, the staff, or the lithography equipment, but that’s all changing.
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China, unable to access leading-edge wafer fab tools from American, European, and Japanese manufacturers, has to develop its own fab equipment, and it’s doing just that at increasing speed and with increasing urgency. Huawei, the latest in the line of companies in China looking to dominate this space, has announced it’s building a giant research and development (R&D) center near Shanghai, where it plans to develop chipmaking tools that will have to be competitive with systems designed by ASML, Canon, and Nikon, reports Nikkei.
The R&D center will focus on developing lithography machines, which are essential for making chips on leading-edge nodes. For now, Huawei’s partners SMIC and Hua Hong cannot get litho tools that allow them to make logic chips on 14nm/16nm FinFET-based process technologies and more advanced processes, but they can still obtain 28nm-capable lithography systems. Therefore, Huawei-developed machines will have to be at least 28nm, or better 14nm/16nm-capable. For now, Dutch company ASML controls well over 90% of the lithography tools market, and that’s what the Chinese want to disrupt.
The R&D center is strategically located in the Qingpu district of Shanghai, part of a larger campus that includes facilities for Huawei’s chip design unit, HiSilicon T, as well as R&D centers for wireless technologies and smartphones. The total investment for this campus is estimated at ¥12 billion ($1.66 billion), covering an area equivalent to approximately 224 football fields. Once completed, it will have the capacity to accommodate over 35,000 employees.
To attract top talent, Huawei is offering competitive salary packages and has already hired engineers with experience in leading chip tool builders and chipmaker. Huawei (and other China-based companies) can no longer hire US citizens and holders of US green cards to lead its projects. Now that ASML, Applied Materials, KLA, and Lam Research have to cut down their presence in China, Huawei and other companies in the country can hire experienced talent with Chinese citizenship.
Huawei’s R&D spending reached a record high of ¥164.7 billion ($22.756 billion) in 2023, accounting for 23.4% of its total revenue. This significant investment underscores the company’s commitment to innovation and the increase can be attributed to growing investments in the development of wafer fab tools.
Before being added to the US trade blacklist, Huawei primarily focused on chip design, collaborating with major contract chipmakers, such as TSMC and Global Foundries. However, following restrictions on access to American technologies, the company shifted its focus to working with China-based contract chipmaker SMIC, the report claims. Huawei is now reportedly venturing into chip production itself, partnering with entities backed by local governments in multiple Chinese cities, including Shenzhen, Qingdao, and Quanzhou, which essentially means that it pours money into fabs operated by Huawei and co-owned by local and federal governments. Additionally, Huawei has invested in numerous local providers of chip materials in a bid to use local suppliers and invest in domestic alternatives.
