The sanctions prevented Huawei from purchasing American semiconductors and other critical technologies. In particular, the company still cannot produce 5G supported smartphones. Now may be an opportunity to bypass these restrictions.

Who will save Huawei?

• The Chinese tech giant has invested in a startup from its hometown of Shenzhen.
• He ordered equipment for the manufacture of microcircuits, including from foreign suppliers. One of Bloomberg’s sources claims that the shipment should already take place in the first half of 2023.
• The newly established Pengxinwei IC Manufacturing Co. it is run by a former Huawei executive and is building a semiconductor factory near Huawei’s headquarters.
• This is confirmed not only by people familiar with the matter, but also by satellite images published by Bloomberg.

Satellite image of Pengxinwei IC Manufacturing taken in March shows the construction process / Maxar Technologies

According to the data, it is planned to start production in 2025, but the names of the customers are not disclosed. Huawei is expected to purchase all or at least most of the PXW products. Company representatives declined to comment on the matter. The startup could circumvent Washington’s efforts to block the flow of chips to a company it sees as a military and economic threat.

USA is already watching

The low-profile PXW has already caught the attention of the U.S. Department of Commerce Bureau of Industry and Security, which helps oversee U.S. trade restrictions. The department is aware of the initiation and “charges of connection with Huawei”.

The Bureau continually monitors attempts to circumvent export controls, including by interested parties. […] and open source to verify proprietary and confidential information and then, where appropriate, apply our administrative or criminal law enforcement and regulatory tools to address violations,
– comments department.

It is unclear whether PXW’s strategic plans clearly violate US trade sanctions. If the firm plans to source Huawei’s chips, it will be severely limited in the chip-making equipment it can buy from American suppliers.

hopes

As Bloomberg writes, PXW will not be able to build a microchip manufacturing business that matches the capabilities of the world’s largest chipmaker TSMS – it supplied Huawei products before the sanctions. However, the startup could help Huawei regain its footing in a few critical areas, such as smartphones and servers.