Chinese telecom giant Huawei Technology Co’s new Mate 60 Pro smartphone has drawn the market’s attention, mainly because it is powered by a 7-nanometer chip made by China’s Semiconductor Manufacturing International Corp (SMIC).
Some analysts say this means that China has broken through a US chip export ban, but what looks like good news about a technological breakthrough and commercial success for China is really a political propaganda show.
The US and its allies are waging a chip war against China, elevating the chip rivalry from the corporate to the national level. The national security aspects of this issue make political propaganda Huawei’s main focus, so it can disregard considerations of commercial cost to incorporate advanced-process chips, which are generally defined as those on a scale of 7-nanometers or smaller.
The firm seeks to create the illusion of strong sales and a business recovery, which helps the Chinese Communist Party’s leaders “maintain stability.”
The Mate 60 series ranges in price from about NT$24,000 to NT$35,000. Compared with the flagship phones of Apple Inc and Samsung Co, which cost NT$30,000 to NT$50,000, Huawei’s prices clearly do not make commercial sense.
In the post-COVID-19 economic quagmire and given the high prices of raw materials caused by the war between Russia and Ukraine, plus the chip ban imposed by the US and other countries, how can Huawei and SMIC hope to surpass Samsung and catch up with Apple in control of global supply chains, especially as there is no complete supply chain for Chinese-made chips?
Outside observers estimate that Huawei’s shipment plan for the second half of this year has grown by about 20 percent to between 5.5 million and 6 million units. This might look like a turnaround for Huawei, but can it deliver the products on schedule? Can it do so in one wave or only in batches?
People who buy electronics tend to be impatient. They often pre-order in response to promotions, but also often cancel orders and buy other products instead if they have to wait too long.
When the chip manufacturing process reaches the 7-nanometer stage, the next technological step is actually a giant hurdle. The cost of chip design and manufacturing at the advanced-process level increases greatly and the threshold requirements of the industrial chain also rise.
Many people think China has made a major technological breakthrough, but leading chipmaker Taiwan Semiconductor Manufacturing Co (TSMC), for example, announced mass production of 3-nanometer wafers in December last year and its research and development efforts are advancing toward 2-nanometer technology. If SMIC wants to compete with TSMC, it clearly has a lot of catching up to do.
Despite China’s elevation of Huawei to the status of a national hero, a long and rocky path lies hidden behind the fog of political propaganda.
Chuang Mao-chieh works in the field of industry and economics.
Translated by Julian Clegg
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