Huawei's Profit Doubles With Made-in-China Chip Breakthrough

Bloomberg thinks they've identified the source of the advanced chips in Huawei's newest smartphone, citing to "people familiar with the matter".In a suggestion that export restrictions on Europe's most valuable tech company may have come too late to stem China's advances in chipmaking, ASML's so-called immersion deep ultraviolet machines were used in combination with tools from other companies to make the Huawei Technologies Co. chip, the people said, asking not to be identified discussing information that's not public. ASML declined to comment. There is no suggestion that their sales violated export restrictions... ASML has never been able to sell its EUV machines to China because of export restrictions. But less advanced DUV models can be retooled with deposition and etching gear to produce 7-nanometer and possibly even more advanced chips, according to industry analysts. The process is much more expensive than using EUV, making it very difficult to scale production in a competitive market environment. In China, however, the government is willing to shoulder a significant portion of chipmaking costs. Chinese companies have been legally stockpiling DUV gear for years - especially after the U.S. introduced its initial export controls last year before getting Japan and the Netherlands on board... According to an investor presentation published by the company last week, ASML experienced a jump in business from China this year as chipmakers there boosted orders ahead of the export controls taking full effect in 2024. China accounted for 46% of ASML's sales in the third quarter, compared with 24% in the previous quarter and 8% in the three months ending in March. Another article from Bloomberg includes this prediction:The U.S. won't be able to stop Huawei and SMIC from making progress in chip technology, Burn J. Lin, a former Taiwan Semiconductor Manufacturing Co. vice president, told Bloomberg News. Semiconductor Manufacturing International Corp should be able to advance to the next generation at 5 nanometers with machines from ASML Holding NV that it already operates, said Lin, who at TSMC championed the lithography technology that transformed chipmaking. The end result is that Huawei's profit "more than doubled during the quarter it revealed its biggest achievement in chip technology," the article reports, "adding to signs the Chinese tech leader is steadying a business rocked by US sanctions."The Shenzhen company reported a 118% surge in net profit to 26.4 billion yuan ($3.6 billion) in the September quarter, and a slight rise in sales to 145.7 billion yuan, according to Bloomberg News calculations from nine-month results released Friday. Those numbers included initial sales of the vastly popular Mate 60 Pro, which began shipping in late August... The gadget sold out almost instantly, spurring expectations it could rejuvenate Huawei's fortunes and potentially cut into Apple Inc.'s lead in China, given signs of a disappointing debut for the iPhone 15... A resurgent Huawei would pose problems not just for Apple but also local brands from Xiaomi Corp. to Oppo and Vivo, all of which are fighting for sales in a shrinking market.

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