Huawei Announces Plans for a “Mega Chip Facility” in China to Decrease Foreign Chip Dependency

Huawei is reportedly constructing a large-scale chip production facility in China, which will focus on manufacturing its highly sought-after Kirin and Ascend chips.

Innovative Chip Production to Enhance AI Development

In recent years, Huawei has undergone significant transformation. Once primarily known as a mobile device manufacturer, the company is now emerging as a formidable competitor to NVIDIA in the artificial intelligence (AI) sector. Huawei’s advances in its Ascend AI chips have been so remarkable that the company struggled to meet demand due to limited production capabilities. However, the latest insights from the Financial Times indicate that these challenges may soon be alleviated with the establishment of a mega chip facility in Shenzhen, aimed at vertically integrating the AI supply chain.

Strategic Location Enhancing Supply Chain Efficiency

The new facility will focus on the production of 7nm chips, particularly catering to the needs of Huawei’s Kirin mobile processors and Ascend AI systems. Strategically located near other prominent Chinese foundries, such as Pengxinwei (PXW) and Shenzhen Pensun (PST), this project reinforces the idea of creating a centralized “hub for foundries.”This approach is expected to expedite sourcing processes and strengthen collaborative links among Huawei and its supply chain partners.

Image Credits: Financial Times

Partnerships and Government Support Driving Development

The initiative is being supported by local government funding, and it’s reported that Huawei will not oversee the facility’s operations directly. Instead, companies like SiCarrier and SwaySure will manage day-to-day functions. Initially, Huawei will provide essential funding and dispatch management and technical personnel to ensure smooth operations. This collaborative ecosystem will enable Huawei to effectively monitor and manage every aspect of the supply chain, which is a key factor in the company’s ongoing success.

Demand Surge for Ascend Chips Necessitating Expansion

The urgency for Huawei’s expansion into semiconductor production is underscored by the shortcomings of SMIC, China’s leading semiconductor manufacturer, which is currently unable to satisfy the soaring demand for Ascend AI chips. Reports suggest that Huawei is facing “millions”of orders, and the rapid development of the Shenzhen facility aims to address this immediate need for increased production capacity. With an anticipated operational start as early as next year, this facility represents a crucial step toward achieving Huawei’s goal of sustainability in advanced chip technology.

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