Chip companies affiliated with Huawei Technologies are on a tear of acquisitions and capacity buildups in a bid to create an independent, self-sustaining supply chain for the Chinese semiconductor sector.
The China Hi-Tech Fair, held in Shenzhen last month, drew roughly 450,000 visitors over three days and included fields such as chips and humanoid robots. But Huawei’s wall of artificial intelligence servers was especially attention-getting.
Huawei’s CloudMatrix 384 servers are filled with in-house-developed Ascend chips designed to compete against products from US rivals such as Nvidia.
The Ascend chips have “the world’s greatest computing capabilities,” said Eric Xu Zhijun, Huawei deputy chairman and rotating chairman.
Also at Huawei’s booth was Joshua Huang Zhexue, chief scientist at the Ascend research institute, which is managed by Huawei and local universities.
“The US is locking down AI semiconductor technology,” Huang said. “China needs to develop on its own, and it’s dependent primarily on Huawei’s Ascend.”
Huawei has put in place its own supply chain in China to develop such high-performance semiconductors as the Ascend. After the US began imposing sanctions on the company in 2019, Huawei established investment firms, including wholly owned subsidiary Hubble.
Through these vehicles, Huawei invested in over 60 semiconductor companies. The goal is to have the targets collaborate closely with Huawei to develop technology and manufacture products.
Now Hubble’s portfolio of companies are ramping up efforts to acquire competitors and build new plants.
Huawei is leading the way in China’s initiative to attain self-reliance in semiconductors and other high-tech fields. Supply chains would no longer be dependent on the US and other Western countries.
Although Huawei is not openly involved in the investments made by companies it has backed, these activities are upgrading its supply chain in line with China’s national policy.
Jiangsu HHCK Advanced Materials, a maker of chip packaging materials, announced last month its full acquisition of a competing Chinese company for RMB 1.6 billion (USD 224 million). HHCK ranks second in China in making heat-resistant epoxy resin material, while the target ranks first. Through the acquisition, HHCK will expand its production capacity and customer base at home and abroad.
“The industry is entering into a growth cycle amid a shift toward using domestic products as alternatives,” said Han Jianglong, HHCK chairman and general manager.
By expanding its scale, HHCK will be able to streamline procurement and production. Huawei holds a 2% stake in HHCK.
Vertilite, which is partly owned by Huawei (with a 4% stake), launched operations at a new facility in Jiangsu in September. The RMB 550 million plant produces compound semiconductors for optical communications, a key technology in Huawei’s AI server infrastructure.
Shanghai Winscene Technology, which makes photoresist used in forming circuits, is building a factory in Shanghai. Aerotech, a supplier of valves and gas pipes used in chipmaking, is expanding a factory in Hebei. Huawei holds small stakes in both.
Huawei is also believed to be working with Chinese companies to develop electronic design automation (EDA) tools, which is an essential chipmaking technology that was under US export restrictions at one point.
Empyrean Technology, a major EDA firm, has not received any investment from Huawei, but the company “is closely cooperating with Huawei on development and performance verification,” a source said.
In line with October’s recommendations for its forthcoming five-year plan through 2030, China aims to accelerate self-reliance and self-development in high-tech fields, including chips that support AI. The government has already established a USD 47 billion fund to prop up semiconductor companies.
China is expected to invest USD 94 billion in manufacturing equipment for cutting-edge 300-millimeter chips between 2026–2028, more than any other region, according to a forecast by global industry body SEMI.
US chip companies including Nvidia have realized high competitiveness by leveraging partnerships with companies in Asia, Europe, and elsewhere. Meanwhile, China is believed to still lag far behind US companies because of its goal to build a Huawei-centric domestic supply chain that covers every field. It remains to be seen how far China can improve its technologies on its own.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.