SMIC is stockpiling chips amidst threats of stricter US sanctions

The launch of Huawei’s Mate 60 Pro, featuring the 7nm 5G-enabled Kirin 9000S chipset, has surely raised alarms in America, considering just last year, China’s SMIC was light years behind the competition. Now, in a recent development, SMIC has reportedly (via Phone Arena) placed big orders for the raw materials of the Kirin 9000S chip possibly in anticipation of stricter US sanctions.

The Crux of the issue

After the US first implemented trade sanctions on Huawei, the company lost its ability to buy chips from other US companies, including TSMC, the biggest smartphone chip producer. Although the US did allow Qualcomm to sell its Snapdragon 8+ Gen 1 chips to Huawei without enabling 5G services, the company started developing homegrown chips with SMIC, which was using the outdated 14nm process node at the time.

However, a significant change occurred with the launch of the Huawei Mate 60 Pro, as the chip powering the device, i.e., Kirin 9000S, not only accessed 5G services in the country but also ran on the much more efficient 7nm node process.

Despite Huawei still being two generations behind in the cutting-edge 3nm A17 Pro chip powering the latest iPhones, it is no surprise that the US government would be looking into this recent development.

Possible reasons behind SMIC stockpiling raw materials

While some in the industry believe it’s a proactive measure against potential new sanctions from the US, others argue that SMIC might be positioning itself to meet Huawei’s demands. This is because Huawei is optimistic about selling up to 20 million units of the Mate 60 Pro. Moreover, given that the device’s sales are expected to continue shipping into the next year, SMIC’s move to increase procurement of raw materials could allow Huawei to be on track to becoming the smartphone giant it once was.

“The United States may strengthen the tightening of its advanced process-related efforts to prepare in advance to avoid a chain-cutting crisis, or it may be necessary to Increase raw material inventory levels to meet customer order needs,” reads the translated report.