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Hynix Shares Drop As Its Chips Found in New Huawei Phone Despite US Sanctions

  • SK Hynix investigating how its chips ended up in Huawei's new Mate 60 Pro smartphone, despite US sanctions
  • Hynix shares fell over 4% when it was revealed its chips were in the Huawei phone
  • Unclear if Hynix sold chips directly to Huawei or if they were purchased on secondary market
  • SMIC chip also found powering the new Huawei phone
  • US lawmakers calling for further tech export restrictions on China following Mate 60 Pro launch
cnn.com
Relevant topic timeline:
Main topic: The Biden administration's proposed regulations to curb U.S. investments in key technology sectors in China due to concerns about enhanced battlefield capabilities. Key points: 1. The proposed regulations aim to prohibit certain investment transactions between U.S. citizens and companies in China in specific technology sectors. 2. For semiconductors and quantum information technologies, the regulations specify where U.S. investors will no longer be allowed to invest in China. 3. However, for AI systems, there are challenges in distinguishing between military and civilian applications, and the administration seeks to shape a prohibition based on the entities involved in the transaction.
Chinese tech giant Huawei is reportedly building secret semiconductor-fabrication facilities in China to evade U.S. sanctions, according to the Semiconductor Industry Association, which claims that Huawei has acquired existing plants and is constructing three others using state funding.
Nvidia warns that stronger US restrictions on chip sales to China will harm American companies in the long term, while also acknowledging that stricter rules wouldn't have an immediate material impact on their finances.
China is aiming to produce its own high-bandwidth memory (HBM) chips for AI processors, despite facing challenges from US sanctions and the technological lead of global leaders such as SK Hynix, Samsung, and Micron. ChangXin Memory Technologies (CXMT) is considered China's best chance for producing HBMs, but it may take up to four years to bring products to market.
The launch of Huawei's new smartphone raises questions about global technology and control of the future, as the Chinese company unveils a smartphone powered by an advanced chip, potentially challenging US efforts to block China from acquiring cutting-edge computer chips.
China has defied US-led export restrictions by producing a 5G smartphone, Huawei's Mate 60 Pro, using an advanced silicon chip made by Semiconductor Manufacturing International Corp (SMIC), indicating progress in China's efforts to build a domestic chip ecosystem.
China's Huawei Technologies' development of an advanced chip for its latest smartphone demonstrates the country's determination to fight back against U.S. sanctions, but the efforts are costly and may lead to tighter restrictions from Washington, according to analysts.
China has reportedly ordered officials at central government agencies to not use Apple's iPhones and other foreign-branded devices for work or bring them into the office, potentially impacting foreign companies operating in China as tensions between the US and China escalate.
The US government is seeking more information about the Huawei Mate 60 Pro smartphone, particularly its advanced chip, to determine if American restrictions on semiconductor exports were bypassed.
Huawei's launch of the Mate 60 Pro smartphone surprised industry experts, as it raised questions about how the company obtained advanced technology despite US restrictions, and a South Korean chipmaker is investigating why its memory chips were found in the controversial handset.
Ten Republican lawmakers are urging the Commerce Department to impose stricter sanctions on Huawei and Semiconductor Manufacturing International Corp. (SMIC), after the companies showcased a domestically manufactured advanced smartphone chip that allegedly violated U.S. export controls, prompting concerns about the effectiveness of current export controls in preventing U.S. technology from reaching China.
SK hynix Vice Chairman Park Jung-ho denies doing business with Huawei and calls for further investigation into the memory used in Huawei's controversial Mate 60 Pro smartphone, suggesting that Chinese sanctions may not be as effective as hoped.
The U.S. government is investigating how Huawei and SMIC managed to create 7nm Kirin 9000S 5G chipsets in violation of American sanctions, while Foxconn workers assembling the Huawei Mate 60 Pro in China are paid 19.2% more than those assembling the iPhone.
Intel's AI chips designed for Chinese clients are experiencing high demand as Chinese companies rush to improve their capabilities in ChatGPT-like technology, leading to increased orders from Intel's supplier TSMC and prompting Intel to place more orders; the demand for AI chips in China has surged due to the race by Chinese tech firms to build their own large language models (LLMs), but US export curbs have restricted China's access to advanced chips, creating a black market for smuggled chips.
The US government's export restrictions on advanced computer chips is seen as a move to control China's access to AI technology and prevent Middle Eastern countries from becoming conduits for Chinese firms to acquire these chips, with countries like Iran, Saudi Arabia, UAE, Qatar, and Israel being the most likely candidates affected by the restrictions.
Reports of Huawei’s new 5G phone using an advanced, China-made chip are highly concerning to U.S. Commerce Secretary Gina Raimondo, raising questions about how Huawei may be bypassing U.S. controls and the potential implications for national security.