Opinion | Huawei's rise from the ashes
By Tom Fowdy
For over three years now, the Chinese technology company Huawei has been subject to a relentless campaign by the United States government to try and destroy its business. Having risen rapidly as one of the world's most successful telecommunications firms, beginning in 2018 Washington launched a campaign of aggression against it which involved coercing countries to ban it from its 5G networks, placing it under growing semiconductor and supply chain sanctions (including the foreign direct product rule), as well as pursuing "lawfare" against its executives with the arrest of Senior Executive Meng Wanzhou (a move later confirmed to be politically motivated).
The mainstream media often boasted about the sheer ruthlessness of the campaign and its apparent success in doing so, which saw the firm excluded from the markets of many allied countries, and forced to retreat from its smartphone business. As a World Street Journal headline in October 2021 read: "U.S. Set Out to Hobble China's Huawei, and So It Has". The firm's leaders frequently spoke of their situation as a battle for the company's survival, as its revenue plunged owing to the collapse of its smartphone business, brought about by US chip sanctions and the loss of Google's Android system.
However, 2023 marks a more optimistic start for the company. Huawei itself hasn't been shy in noting that, with current co-chair Eric Xu saying this year will be "business as usual". The firm's slide in revenue is expected to now stabilize and come to an end, but in addition to that, there have also been some more exciting developments. First, at the end of 2022, it emerged that Huawei had registered a patent in China pertaining to the technology of "Extreme Ultraviolet Lithography" (EUV), a chipmaking technique that is required to make the most advanced semiconductors.
The United States has waged a phenomenal and ongoing effort to try and ensure China does not acquire such capabilities, having blocked the export of an EUV Lithography machine from the Netherlands country ASML in 2018. The US has continued to try and strongarm the firm into implementing more export restrictions on China, much to the disdain of its executives, who have long stated Beijing will simply establish its own capabilities. Now, Huawei's successful innovation of a patent in this field is a major breakthrough and a first step to developing this technology, although experts note a lot more other technologies are also required to build such a machine.
For those following the company closely, this development did not come out of nowhere. In the past few years, Huawei began laying the foundations to create its own semiconductor supply chain. Its subsidiary firm, Hubble Technologies, began acquiring stakes in other chipmaking companies throughout China, as well as a local lithography firm. In conjunction with this, Huawei also created a new sub-company known as "Huawei Precision Manufacturing" which was quoted as creating "core devices, modules and components for Huawei's wireless and digital energy products, including the assembly, packaging and testing of some products".
Although it denied at this point it would create chips, it seemed obvious from the clues that this was on the horizon. Recently, a new insider, quoted on Gizmo China, stated that the company is set to roll out mass production of its own 12-14nm chips at some point this year. While these chips are older, and within reach of the semiconductor manufacturing capabilities China already has, it is nonetheless another milestone in how Huawei is developing itself towards self-sufficiency in the bid to offset US sanctions. It shows the resolve of the company in its long-term strategy not to be broken, and its own investments are ultimately paying off. Huawei's Research & Development budget after all, has been a staggering $22 billion, it seemed logically improbable the firm would be permanently crippled.
The future is now looking brighter for Huawei, which has passed its lowest ebb and is now "rising from the ashes". American semiconductor sanctions targeted at China are premised on the arrogant assumption without access to US parent technology, the country is unable to innovate. This is false, and is based on strategic assumptions premised from the Soviet Union era. Huawei has always had a point to prove given this effort to destroy it, and the firm will ultimately emerge stronger, and it is the firm's prospects that will stand to tell the larger story of how the US-China technology war pans out.
The author is a well-seasoned writer and analyst with a large portfolio related to China topics, especially in the field of politics, international relations and more. He graduated with an Msc. in Chinese Studies from Oxford University in 2018.
The views do not necessarily reflect those of DotDotNews.
Read more articles by Tom Fowdy:
Opinion | The new China COVID scare
Opinion | 2022, a decisive year for the history books
Comment