Huawei is advancing its semiconductor ambitions with the rapid expansion of its chip production capabilities in Shenzhen, China, as part of an effort to reduce the country’s reliance on foreign technologies. Satellite imagery obtained by Financial Times reveals multiple manufacturing sites in Guanlan, a district in Shenzhen where Huawei has been constructing a network of semiconductor facilities.
The facilities, which have been built with remarkable speed since construction began in 2022, demonstrate Huawei’s increasing drive to become a leader in semiconductor production, bolstering China’s efforts to compete with the United States in critical technological fields, including artificial intelligence (AI).
“Huawei has embarked on an unprecedented effort to develop every part of the AI supply chain domestically, from wafer fabrication equipment to model building,” said Dylan Patel, founder of chip consultancy SemiAnalysis. “We have never seen one company attempt to do everything before.”
According to multiple sources familiar with the project, one of the sites is directly operated by Huawei and will produce its 7-nanometre smartphone processors and Ascend AI chips — the company’s first major attempt at manufacturing high-end chips in-house. Two other facilities, which were completed last year, are run by SiCarrier, a chip equipment maker, and SwaySure, a memory-chip manufacturer. While Huawei denies direct links with these two start-ups, industry insiders suggest that the company has helped raise investment for the firms and has provided both technical and managerial support.
These new facilities come as part of Huawei’s broader strategy to challenge the dominance of foreign tech giants like Nvidia, ASML, SK Hynix, and Taiwan Semiconductor Manufacturing Company (TSMC) in the chip industry. Huawei’s chip-making efforts gained significant momentum after the US imposed sanctions on the company in 2019, restricting its access to key foreign technologies. This push to localize the development of critical components is seen as a key part of China’s broader strategy to counteract US export controls.
“I thought that Huawei was done once the US went after it,” one company executive remarked. “But its ambitions have only grown, and the strides it is making have been extraordinary.”
The construction of these semiconductor facilities is not limited to Shenzhen. Huawei has also made significant investments in semiconductor plants located in other Chinese cities, including Shanghai, Ningbo, and Qingdao. However, some industry insiders have expressed skepticism about the company’s ability to reach its ambitious goals, given its relative inexperience in semiconductor manufacturing compared to long-established competitors like ASML and TSMC.
“This is a big project that has had a lot of state support,” said one chip investor. “But there are rival companies in China working on the same thing for decades without managing to match ASML and TSMC.”
Despite these concerns, Huawei is pressing forward with its efforts, aided by state funds and its extensive network of industry partners. The company’s collaboration with SiCarrier and SwaySure, though officially denied, is said to be crucial to Huawei’s ability to advance quickly. According to those familiar with the operations, Huawei provides early-stage support to these companies, including sharing personnel, technology, and systems to help accelerate technological development.
Huawei’s investment in semiconductor technology is also strategic, as it helps avoid the need for external investment that could potentially dilute the company’s control. “These companies will be cut off from Huawei once they reach a certain stage of development,” said one source. “During the process, Huawei empowers them through providing personnel, technology, and systems. This helps speed up the technology iteration and improves their chances of success.”
The facilities in Shenzhen and other locations are still in the early stages, with one self-operated site expected to begin operations in about a year. However, the urgency to ramp up production of the Ascend AI chip is pressing, particularly after revelations that Huawei had been circumventing US sanctions by using third-party companies, including TSMC, to make the chips.
Huawei’s political influence is also thought to play a role in the project’s success, as many of its partners, such as SMIC and Shanghai Micro Electronics Equipment, are reportedly assisting the company despite the competitive nature of the chip sector. “Companies are expected to assist, even when it means helping a competitor,” said one insider, referring to the cooperation between Huawei and its domestic rivals.
The US government has closely scrutinized Huawei’s semiconductor operations, with the Department of Commerce placing SiCarrier and SwaySure on the “entity list” in December, barring American companies from selling technology to them. These sanctions are part of the broader US effort to restrict Huawei’s access to advanced technologies, particularly in relation to its military modernization programs.
As Huawei works to cement its position in the global semiconductor industry, its progress is likely to have far-reaching implications not only for the company but also for China’s broader tech ambitions. The effort to build an independent, self-sufficient semiconductor supply chain could reshape the global competitive landscape, with Huawei at the forefront of this high-stakes technological battle.
