Huawei eyes opportunity posed by EU semiconductor goals

Telecoms giant Huawei is keen to work alongside European companies to help the bloc achieve ambitious new benchmarks for semiconductors by 2030, as the firm continues to face challenges resulting from US trade restrictions.

Since being put on a US export blacklist by the Trump administration in 2019, China's Huawei has faced obstacles in sourcing components required in the development of its own chips. [Shutterstock]

This article is part of our special report Re-connecting Europe.

Telecoms giant Huawei is keen to work alongside European companies to help the bloc achieve ambitious new benchmarks for semiconductors by 2030, as the firm continues to face challenges resulting from US trade restrictions.

Since being put on a US export blacklist by the Trump administration in 2019, China’s Huawei has faced obstacles in sourcing components required in the development of its own chips.

Speaking at Huawei’s global analyst summit on Monday (12 April), rotating Chairman Eric Xu warned of the damage that the continuation of these restrictions could do to global semiconductor supply chains, and said that ongoing sanctions on Huawei’s business with American firms could raise costs within the industry across the globe.

“In the coming years, higher costs for the semiconductor industry is something we’re pretty sure of. The unwarranted US sanctions undermined our company,” Xu said.

Huawei had “no expectation” of being removed from the US entity list under the Biden government in the future, he added.

Many of Xu’s comments chimed with a study published in early April by the Semiconductor Industry Association (SIA), which found that new supply chain vulnerabilities have emerged in the sector, requiring government intervention in the form of “funding incentives” that may be required to “boost domestic chip production and research.”

The US sanctions, the report notes, have resulted in a landscape that is “fueling a desire to develop self-sufficiency in semiconductors.”

“The concepts of semiconductor ‘self-sufficiency’, or technology ‘independence’ or ‘sovereignty’, are being discussed as potential desirable national policy goals – often with a focus on semiconductor manufacturing,” the study states, adding that the levels of investment required to become fully self-sufficient and to “nearshore production capacity,” would be “staggering.”

Referring specifically to the US sanctions, the report says that these “rules have encouraged China to develop and seek alternatives, and although it may take some time to do so, the trend towards reduction of dependence on US semiconductor suppliers and indigenization of the supply chain is beginning to take shape.”

For Huawei’s part, it too is looking elsewhere for alternatives but believes that opportunities remain in the West, potentially in the form of goals recently put forward by the European Commission to increase its semiconductor manufacturing capacity.

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The EU’s Digital Decade targets 2030

Since 2019, Huawei has sought other means of continuing its involvement in the semiconductor trade. In Europe last year, news broke that the company had signed a deal with French-Italian chipmaker STMicroelectronics, seeking to mitigate the aftereffects of the downturn in trade as a result of the entity list placement.

Huawei is now looking to increase its business opportunities with European firms in the semiconductor space, under the assumption that restrictions on US firms dealing with the company remain.

The firm “stands ready to work with all our European partners on helping Europe attain genuine technology sovereignty and competitiveness,” a Huawei official informed EURACTIV. “Part of this is helping to strengthen Europe’s independent semiconductor capabilities.”

Earlier this year, the Commission unveiled its Digital Decade targets, a list of objectives to be achieved by 2030. In the connectivity domain, the bloc’s build-up of high-end microprocessors was highlighted as an area in which the EU needs to make progress.

While Europe already designs and manufactures high-end chips across several EU nations, the Commission recognized that “there are important gaps, notably in state-of-the-art fabrication technologies and in-chip design, exposing Europe to a number of vulnerabilities.”

As a result, one such target included in the Digital Decade 2030 plans is to ensure that the production of cutting-edge and sustainable semiconductors in Europe including processors is at “at least 20% of world production in value”.

Huawei smells an opportunity as part of the bloc’s new benchmarks, hoping to claw back some of the business lost following the restrictions imposed stateside.

“The EU has leading semiconductor manufacturers, from a range of member states, and Huawei is keen to partner with them and help them further develop their world-beating innovations where we can, to enhance Europe’s tech ecosystem,” the Huawei official said.

However, the Chinese firm faces competition from US rivals in terms of the Commission’s targets for 2030, particularly in the field of semiconductors.

US computer giant Intel recently penned an op-ed for EURACTIV in which the company praised the benchmarks, highlighting plans to expand its semiconductor manufacturing operations in Ireland. The company is “in a unique position to support the EU agenda of securing the supply of advanced semiconductors for the European market,” the op-ed stated.

More broadly, the setbacks Huawei has faced in the US have had an impact on the firm’s revenues worldwide, annual figures recently published for 2020 show.

In Europe, Huawei saw its revenues down 12.2% for last year, but filed increased profits for China, up by 15.4%. Globally, the company registered a 3.2% profit increase.

[Edited by Josie Le Blond]

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