Huawei Technologies is gearing up to introduce its most advanced domestically produced phone chip, signaling a significant achievement in semiconductor innovation despite enduring US sanctions. According to The Wall Street Journal, which cited sources familiar with the matter, this new chip is expected to power select models in the upcoming Mate 70 series.

The move not only showcases Huawei's resilience in the face of trade restrictions but also positions the company as a stronger competitor in the high-end smartphone market, challenging global players like Apple.

The chip is expected to feature in select models of the Mate 70 series, which is set to hit the market next week. Huawei aims to use the series to rival Apple and capitalize on the market-share gains it has achieved since last year. Although Apple continues to hold China as its second-largest market after the US, its dominance in the high-end smartphone segment has faced increasing competition from Huawei.

Recently, Huawei teased the Mate 70 series online, showcasing three rear camera lenses and announcing a product launch event scheduled for Tuesday. However, the company has not disclosed specific details about the phones' features or the chips they will include—an area closely monitored by US policymakers who have worked to restrict Huawei's technological advancements.

The company remains under a trade blacklist imposed during the Trump administration in 2019.

Huawei's rising market share intensifies competition with Apple in China 

Huawei's steady progress in semiconductor development poses both a security concern for the US and a competitive challenge for Apple. According to industry researcher IDC, Huawei's market share in China has grown significantly, climbing from 8.6% in the first quarter of last year to 15.3% in the third quarter of this year. In recent quarters, Huawei has been competing closely with Apple.

The company's resurgence is partly driven by a wave of nationalistic consumer support in China and standout features such as advanced cameras and, more recently, artificial intelligence capabilities, as per the report. Notably, Apple has yet to introduce its Apple Intelligence features in the Chinese market.

The competition between the two tech giants, as per WSJ, is particularly intense in the high-end smartphone segment. It is worth noting that Huawei's flagship Mate 60 series starts at $690 in China, while Apple's iPhone 16 series begins at approximately $830.

“The Mate 70 will continue to put more pressure on Apple in China,” remarked Bryan Ma, IDC Vice President as quoted by WSJ. He acknowledged that while Huawei's chips still lag behind Apple's in areas like power efficiency, “this might not amount to much of a practical difference as long as the user is able to get through the day without having to worry about charging.”

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Huawei has begun accepting preorders in China for its Mate 70 series, with around 2.5 million people expressing interest in purchasing the device through an online feature, though this number is not a firm commitment. The company has managed to navigate US sanctions by relying on domestic technology. For instance, after losing access to certain Android services from Google, Huawei developed its own operating system, HarmonyOS Next, which will power the three models in the Mate 70 series, according to sources.

In August 2023, Huawei surprised US officials by launching the Mate 60 series, which boasted communication capabilities comparable to high-speed 5G phones available globally, despite being cut off from US-sourced 5G technology. Another unexpected development was the inclusion of a processor manufactured with the assistance of a Chinese chip factory. While not yet at the level of the best chips produced by Taiwan Semiconductor Manufacturing, Apple’s partner for iPhones, the Huawei chip was closer to Apple’s than many in the industry had expected.

Notably, Huawei unveiled the Mate 60 series during US Commerce Secretary Gina Raimondo’s visit to Beijing, a move widely seen as a defiant gesture towards Washington.

Inside Huawei’s chip breakthrough: A 7nm marvel defying US sanctions

A teardown of Huawei's Mate 60 Pro by Canadian research firm TechInsights revealed that the phone's integrated circuit was produced using technology comparable to 7-nanometer processes, similar to those employed by advanced factories in the US and Taiwan. The term "nanometer" refers to the size of transistors on a chip, with smaller numbers indicating more advanced technology. By comparison, Taiwan Semiconductor Manufacturing Company (TSMC) currently offers commercially available chips in the more advanced 3-nanometer category.

According to TechInsights, the chip in the Mate 60 was likely manufactured by Semiconductor Manufacturing International Corporation (SMIC), China’s largest contract chipmaker. SMIC, like Huawei, is on the US trade blacklist, which restricts its access to state-of-the-art chip-making equipment.

To overcome these limitations, SMIC has used a technique known as multiple-patterning lithography to etch finer circuits onto wafers, TechInsights explained as cited by WSJ. While this approach helps bypass equipment constraints, industry experts note it comes with drawbacks, including lower yields of usable chips and increased production costs.

Huawei boosts Mate 70 chips amid bottlenecks and US scrutiny

Huawei is utilizing techniques like multiple patterning to enhance the power efficiency and performance of the chips in its upcoming Mate 70 series, WSJ reported citing sources. However, analysts point out that the company is facing manufacturing constraints for the new devices. Some Huawei retailers have informed customers that those who miss the initial preorder window might experience months-long delays.

Meanwhile, US authorities have ramped up investigations into how Huawei and other blacklisted Chinese companies continue to bypass export controls and access advanced chip technology. Reports indicate that some of Huawei’s AI chips contained core circuitry produced by TSMC. In response, the US has urged the Taiwanese chipmaker to tighten oversight of orders from Chinese clients related to AI applications, sources said.

To bolster its technological independence, Huawei is increasing investments across the semiconductor supply chain, including areas like lithography, assembly, and testing, alongside its chip-design division, HiSilicon.