Huawei establishing substantial research and development facility for chip production in Shanghai
Huawei Technologies, the Chinese tech behemoth, is delving into chip production by setting up a semiconductor equipment research and development (R&D) hub in Shanghai. The new hub, situated in the Qingpu district, spans approximately 224 football fields, nearly doubling the size of Huawei's renowned Ox Horn Campus.
The total investment for the R&D hub is projected to be around RMB 12 billion (USD 1.66 billion). Once completed, the R&D campus will have the capacity to accommodate over 35,000 high-tech workers.
In an effort to localize a larger portion of its semiconductor supply chain, particularly those related to chip manufacturing and equipment, Huawei aims to lessen its dependence on foreign suppliers. This move comes in response to the US crackdown and subsequent restrictions that have prompted many Chinese chipmakers to seek domestic alternatives whenever possible.
Huawei has been one of the most proactive Chinese companies in utilizing local suppliers and investing in domestic alternatives. The company has hired numerous engineers who have worked with top global chip tool builders like Applied Materials, Lam Research, KLA, and ASML.
Brady Wang, a semiconductor analyst with Counterpoint, noted that Huawei has worked diligently to localize its chip-related sources and switch to local components. The company is also partnering with local governments in multiple Chinese cities for its ventures into chip production.
The mission of the hub includes constructing lithography machines, crucial equipment for producing state-of-the-art chips. However, no information has been disclosed regarding which companies have advised Huawei Technologies on leading technologies for establishing the new Semiconductor Equipment Research and Development Centre in Shanghai.
Washington's tighter export controls have made it more challenging for Chinese citizens to work for foreign chip companies in China, leaving more top chip talent available for Huawei and other local companies. This shift in the industry landscape has also led to a significant increase in revenue for Chinese semiconductor equipment suppliers like Naura, China's leading supplier of semiconductor equipment. Naura has seen its revenue more than quadruple since 2018 and is expected to report another record year in 2023.
Huawei's R&D spending in 2023 reached a record high of RMB 164.7 billion (USD 22.7 billion). The company is offering salary packages worth up to twice as much as local chipmakers for the new hub's staff, further enticing top talent to join the tech giant.
The R&D hub is housed on a spacious campus that also includes a major chip development centre, the new headquarters of HiSilicon Technologies, research centres for wireless technologies and smartphones. The establishment of this hub marks a significant step for Huawei in its pursuit of self-sufficiency in the chip industry.
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