Huawei bets big on chip packaging to counter US crackdown

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China’s Huawei Technologies is aggressively boosting its chip packaging capabilities to mitigate the impact of a U.S. crackdown that has cut off the company’s access to vital semiconductor production technologies, officials told Nikkei Asia. informed sources on this subject.

Chip packaging refers to the final stage of manufacturing semiconductors before they are mounted on printed circuit boards and assembled into electronic devices. Compared to making the chips themselves, less of the relevant technology is controlled by American companies. Washington has cut off Huawei’s access to advanced U.S. chipmaking technologies since 2019, citing national security concerns.

One example of Huawei’s new direction is a recent collaboration with Quliang Electronics, a little-known chip packaging and testing vendor based in Fujian province. Quliang is rapidly expanding its production capacity in the city of Quanzhou to help Huawei bring its advanced chip assembly designs to production and test some of the company’s cutting-edge chip stacking and packaging technologies, said four people familiar with the matter at Nikkei Asia.

The Fujian government is one of the most supportive of Huawei’s ambition to boost its chip packaging capabilities, the sources added, although the company is also seeking manufacturing partners in several other provinces. Additionally, Huawei established a new subsidiary, Huawei Precision Manufacturing, with a paid-up capital of Rmb600 million ($94.5 million) in Shenzhen at the end of December to operate electronics manufacturing. One of the main goals of the new subsidiary is to develop chip packaging technologies, people familiar with the matter said.

The struggling tech giant has also accelerated its efforts to hire experts from top vendors such as Taiwan’s ASE Technology Holding, the world’s leading provider of chip packaging and testing services, sources told Reuters. Nikkei Asia. ASE declined to comment.

This article comes from Nikkei Asia, a global publication with a unique Asian perspective on politics, economics, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the largest and fastest growing listed companies in 11 economies outside of Japan. .

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Partnerships with local tech giants are another strategy that Huawei pursues. The company has partnered with display champion BOE Technology Group to develop panel-level chip packaging technology, in which chips are assembled on display-panel-like substrates, rather than materials platelets, said people familiar with the matter. This new approach is gaining traction among new and established industry players, such as Powertech Technology, the world’s largest memory chip packaging service provider.

These moves are part of Huawei’s ongoing efforts to improve its overall chip capabilities. In 2021 alone, the company’s investment arms – including Hubble Technology Investment – took or increased stakes in more than 45 domestic tech companies, Nikkei Asia analysis showed, more than double the figure. of 2020. Some 70% of its investments last year were in semiconductor suppliers, ranging from chip developers and design tools to production equipment and materials.

Chip packaging in particular has become a major battleground for the world’s major chipmakers, namely Samsung, Intel and Taiwan Semiconductor Manufacturing, as they seek to produce ever more powerful chips.

Previously, semiconductor development focused primarily on how to squeeze more transistors onto a chip — in general, more transistors translate to more computing power. But as the space between transistors has shrunk to a few nanometers, this approach has become more difficult, leading some to predict the end of Moore’s Law, the postulate that the number of transistors on a chip will double every both years.

In response, the world’s top chipmakers and developers began to devote more resources to the previously neglected area of ​​chip packaging, developing new ways to place or stack chips together to improve performance.

Intel CEO Pat Gelsinger himself has emphasized the importance of chip packaging.

“The most important thing is the packaging. Packaging Now Takes Advantage of Silicon Processes Even [more broadly]”, he said in video remarks delivered at an Intel forum in Taipei on Jan. 9, adding that chip packaging, along with state-of-the-art production methods, would help the chip industry maintain or even outpacing Moore’s Law over the next decade.

For Huawei, the appeal of this approach is the existence of several non-US vendors of chip packaging equipment. This means that Chinese companies have alternatives to develop an autonomous supply chain that is not vulnerable to US sanctions. Production lines for manufacturing and manufacturing advanced chips, by comparison, are dominated by a handful of U.S. equipment makers such as Applied Materials, Lam Research and KLA.

Since it was first placed on a US blacklist in 2019, Huawei has never given up on its goal of advancing its chip capabilities, the core competitiveness that has helped it become the biggest company Chinese technology. Its semiconductor design arm, HiSilicon Technologies, has helped Huawei challenge Apple, Qualcomm and MediaTek in mobile processors, and remains China’s top chip developer.

Meanwhile, Huawei is sending teams to build several mini production lines in Shenzhen, Shanghai and Wuhan in collaboration with domestic contract chipmakers to put different chip designs into trial production, multiple sources told Nikkei. informed about it.

Huawei’s aggressive investment in domestic semiconductor-related businesses, especially those located in areas controlled by US companies, is in line with Beijing’s campaign to build a secure and controllable supply chain amid ongoing US-China tensions, Nikkei Asia reported earlier. The company has also extended its talent hunt to Europe, Central Asia and Canada to maintain its technological advancement.

Brady Wang, technical analyst at Counterpoint Research, said Huawei has a history of identifying and investing in key longer-term technologies, as it has with mobile chips for more than a decade.

“It is natural for Huawei to further identify certain key areas to advance its technologies and build on new rounds of investment, especially since it has suffered the most from the current geopolitical conflicts,” Wang said. “However, it is not possible for a company, a country or a region to be entirely autonomous. Putting the current tensions between the United States and China in context, all countries, regions and companies will certainly have to secure certain key advantages and vital technologies – such as how Japan has crucial chip-making materials – that ‘they can then use to negotiate or compete on the world stage.

A version of this article was first published by Nikkei Asia on January 12, 2022. ©2022 Nikkei Inc. All Rights Reserved

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