Why did the United States, which is troubled by chip shortages, agree to approve the sale of automotive chips to Huawei?

In recent weeks, people familiar with the application process told Reuters that the United States has granted suppliers licenses authorizing them to sell chips used in auto parts such as video screens and sensors to Huawei. At a time when American auto companies are struggling with chips, why did the U.S. government agree to provide auto parts chips to Huawei?

The United States has approved hundreds of millions of dollars in license applications from suppliers to sell chips used in auto parts to Huawei, two people familiar with the matter said.

A Huawei spokeswoman declined to comment on the licenses but reiterated: "We are positioning ourselves as a new component supplier for smart connected cars, and our goal is to help automotive OEMs (manufacturers) build better cars."

What does the US government want to do?

As we all know, the US government has spared no effort in recent years to suppress the growth of Huawei's key communications business on the grounds that it poses a threat to national security and foreign policy interests. Since adding Huawei, the world's largest telecommunications equipment manufacturer, to the Commerce Department's trade blacklist in 2019, the US has banned the sale of US goods and technology to the company without a special license, and has even further restricted the sale of chips manufactured abroad using US equipment.

Since then, Huawei has been hampered by trade restrictions imposed by the Trump administration on the sale of chips and other components used in its network equipment and smartphone business. Biden has also been strengthening his hard line on Huawei exports since taking office, refusing to sell Huawei licenses for 5G equipment or 5G equipment chips.

But in recent weeks, people familiar with the application process told Reuters that the United States has granted suppliers licenses authorizing them to sell chips to Huawei for use in auto parts such as video screens and sensors.

Today, the global chip shortage is getting worse. According to a report by Taiwan Economic Daily today, due to the continued shortage of wafer foundry capacity, the leading wafer foundry TSMC has recently notified all IC design customers that it will expand the scope of wafer foundry fee increases, and will increase prices across the board starting in the fourth quarter. Among them, the price of advanced processes below 12nm will increase by 10%, and the price of mature processes above 12nm will increase by 20%. This move will help TSMC's gross profit margin increase and maintain the 50% mark.

As prices continue to rise, automotive chips are going from being in short supply to being in long-term shortage. A production reduction assessment report for North American automakers and models released by AutoForecast Solutions, a global automotive consulting firm, shows that the Detroit Big Three - General Motors, Ford and Stellantis (including Fiat Chrysler) "stabilize" in the top three and have been hit hard.

At a time when American auto companies are struggling with chip shortages, why did the US government agree to provide automotive parts chips to Huawei?

Automotive chips are generally considered to be of low complexity, which lowers the threshold for approval. A person close to the license approval said the government is issuing licenses for automotive chips that may have other components with 5G capabilities.

In the field of mobile phone chips, Huawei is one of the few manufacturers that has self-developed high-end chips. Based on Huawei's R&D foundation in mobile phone chips, it seems not impossible to win the market in the field of automotive chips. At the same time, Huawei has currently cooperated with a large number of automakers. Once it fully realizes self-developed and self-produced automotive chips, the United States may lose the world's largest automotive market.

In fact, the US government has already taken similar measures. For example, in the early 1980s, my country even had to import 8086 chips. However, even for such low-cost chips, my country not only needs to buy them at high prices, but is also often blocked by the Batumi. For this reason, the main work of a number of microelectronics institutes, such as the Institute of Microelectronics of the Chinese Academy of Sciences, the Institute of Microelectronics of Tsinghua University, and the Institute of Microelectronics of Fudan University, is to deal with the technical blockade imposed by many countries on the mainstream manufacturing technology of China's microelectronics industry. When a microelectronics institute made a 0.6um integrated circuit production process, the Semiconductor Industry Association of the United States lobbied Congress to approve the opening of exports of this product to China.

This shows that the US government's move is still its usual approach. However, for Huawei, which has suffered the pain, independence will probably still be its best strategic choice.

Huawei seeks breakthrough in automotive chips

Based on the experience of smartphones, Huawei has been continuously developing in the field of automotive chips. As we all know, the current technology of automotive chips is still mostly at the level of 8 inches and 28nm or above. Therefore, compared with mobile phone chips, the production and manufacturing threshold of automotive chips is lower, creating conditions for Huawei's independent breakthrough.

According to Nikkei News, Huawei began to cooperate with semiconductor company ST Microelectronics to develop semiconductors as early as 2019. In addition to smartphones, it also entered the automotive field (such as autonomous driving).

The STMicroelectronics partnership will reportedly allow Huawei to use software from U.S. companies such as Synopsys and Cadence Design Systems. The sources said that working with STMicroelectronics, a leading automotive semiconductor supplier to Tesla and BMW, could allow Huawei to leapfrog into the top player in the field of autonomous driving.

In terms of self-developed automotive chips, Huawei HiSilicon signed a cooperation agreement with BYD, and the first product is the Kirin 710A used in the field of automotive digital cockpits. With this Kirin chip as a starting point, HiSilicon's self-developed chips officially began to independently explore the application of automotive digital cockpits.

In addition to internal research and development, external investment has also become an important way for Huawei to break through. It is understood that Huawei's "Huabo Technology" has invested in Shandong Tianyue, Deep Thinking, Kunyou Optoelectronics, Haoda Electronics, and Yutai Auto Communication in the automotive field. It is not difficult to find that the companies invested by Hubble Technology are all well-known upstarts in the IC industry, and their main products are mainly self-developed high-tech. It can be seen that Huawei is bound to enter the automotive semiconductor field.

Not only that, as early as December last year, according to the official information released by China Construction Eighth Bureau, the main factory building of FAB2 of Wuhan Huawei Optical Factory Project (Phase II), Huawei's first chip factory in China, which was constructed by China Construction Eighth Bureau, had successfully completed the main structure topping-out on November 30.

It is reported that the Wuhan Huawei Optical Factory will be managed directly on behalf of Huawei by a research and development company headquartered in Shanghai. No technology from the United States will be involved in the factory's production, and it will be completely independent and controllable. According to the proposed plan, the factory will test the production of 45nm chipsets at the end of 2021 and use 28nm lithography technology. It strives to use advanced processes below 20nm to manufacture chips specifically for its telecommunications department in 2022, and produce Huawei's self-developed optical communication chips and modules.

After the Wuhan Huawei Optical Factory is fully completed, it will mean that Huawei has truly realized the complete industrial chain of chips from design to manufacturing, packaging and testing, and investment in the consumer market, announcing Huawei's successful transformation into a comprehensive semiconductor company.

Huawei CC architecture alleviates the multi-core dilemma

Of course, we cannot treat the symptoms without addressing the root cause. Smart cars require more and more chips. Huawei will also seek to improve the overall system to further solve the chip problem.

As we all know, the automotive control unit (ECU) is a key device for realizing the functional control of the whole vehicle. In traditional vehicles, it is a distributed architecture, and each additional function requires an additional ECU (automotive control unit). At present, the average car uses about 25 ECUs, but the number of ECUs in high-end models has exceeded 100. Such a large number of chips not only adds more costs to the car, but also increases the difficulty of coordination between chips.

In this context, as the upper-level center of the automobile controller, how to transform the automotive electronic and electrical architecture (also known as the E/E architecture), that is, the overall layout plan of the vehicle's electronic and electrical system, has become the focus of subversion.

In this regard, Huawei HI smart car solution includes "1+5+N": based on ICT technology, a full-stack solution consisting of one architecture (CC architecture), five intelligent systems (intelligent driving/intelligent cockpit/intelligent electric/intelligent car cloud/intelligent networking), and a full set of intelligent components (smart screen + AR-HUD + integrated thermal management + perception iron triangle, etc.). In addition, HI will provide powerful computing power and operating system, including three computing platforms: intelligent driving computing platform, intelligent cockpit computing platform and intelligent vehicle control computing platform, as well as three operating systems: AOS (intelligent driving operating system), HOS (intelligent cockpit operating system) and VOS (intelligent vehicle control operating system).