Huawei has started investing in emerging Chinese chip companies as the telecoms group accelerates efforts to become self-reliant in semiconductor technologies in the face of US sanctions.
Hubble Technology Investment, a Rmb2.7bn ($413m) fund set up by Huawei in April last year, has acquired minority stakes in three Chinese semiconductor equipment companies over the past three months.
That marks a significant shift in strategy that observers believe is linked to Huawei’s plans for “de-Americanised” chip production, as the Shenzhen-based group struggles in the face of US restrictions.
Hubble was previously “investing mainly in companies that can be direct suppliers to Huawei, but a couple of recent investments are different”, said Mark Li, a chip analyst at Bernstein in Hong Kong. “They are semiconductor equipment vendors that are not going to be direct suppliers to Huawei.”
Under export controls imposed in May and tightened in August, Washington banned the use of US technology for designing or manufacturing chips anywhere that could end up in Huawei products.
Although some companies have received licences to continue supplying the Chinese group, the restrictions have threatened the future of Huawei’s business.
In response, Beijing has stepped up its push to become self-reliant in semiconductors. That plan includes a dedicated chip plant for Huawei that would run without US-bought equipment.
The “investments are clearly replacing US companies they can no longer get access to”, said a chip industry executive.
According to public company records, Hubble in September acquired a 3.3 per cent stake in Skyverse, a company backed by the Chinese Academy of Sciences, which makes test and inspection tools for use in semiconductor manufacturing. Although only Rmb3.3m, the investment is seen as highly strategic because it gives the company access to technology it can no longer source from the US.
Skyverse offers products similar to those of KLA, one of America’s leading chip equipment makers. It competes with NI and Teledyne Technologies, chip plant suppliers based in Texas and California, respectively. “Huawei can no longer work with them because of the [recent sanctions],” said one industry executive of the US suppliers.
In late November, the Huawei-affiliated fund made two more investments in Chinese semiconductor equipment and materials makers worth a combined Rmb13m.
It took a 6.2 per cent stake in Ningbo Allsemi, a small company that makes machines for etching wafers and removing photoresist layers, both important processes in chip manufacturing.
According to Bernstein’s Mr Li, Ningbo Allsemi’s products resemble those of AMEC, China’s second-largest chip equipment maker, or of international peers Lam Research and Tokyo Electron.
Less than a week later, Hubble bought 4.6 per cent of Epiworld International. The company produces inspection tools for silicon carbide, a speciality material for manufacturing high-end power management chips used in electric vehicles, such as certain newer Tesla models.
However, industry experts caution that the investments by Hubble highlight the extreme challenge Huawei faces in trying to create a dedicated domestic chip supply chain.
“The equipment makers the fund invested in recently are small players. They are much smaller than the leading Chinese companies in this space, who in turn are far smaller than international rivals,” Mr Li said.
Huawei declined to comment on the matter.
Additional reporting by Qianer Liu in Shenzhen
Source: Economy - ft.com
