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Huawei’s Latest Smartphone Signals Escalation of U.S.-China Tech Conflict

In a display of China’s technological independence, Huawei, the telecom giant facing U.S. trade restrictions, unveiled a new smartphone powered by an advanced chip. This chip represents a significant achievement for China’s homegrown technology and highlights the difficulties the United States has faced in curbing China’s technological advances. The release of this phone comes at a time when the U.S. Commerce Department is attempting to limit China’s access to advanced chips, and Commerce Secretary Gina M. Raimondo defended these restrictions during her recent trip to China.

While Chinese media celebrates the phone as a breakthrough for China’s technology, U.S. analysts believe that American technology and machinery were likely used in its production, violating U.S. trade restrictions. Over the past few years, the United States has increased restrictions on selling advanced chips and manufacturing machinery to China, particularly Huawei, to prevent China from gaining mastery over technologies that could be used for military purposes. However, Huawei seems to have found a way to bypass these restrictions and produce an advanced phone, although in limited quantities.

The chip inside Huawei’s new phone was examined by TechInsights, a Canadian firm that analyzes the semiconductor industry. They concluded that the chip was made by China’s Semiconductor Manufacturing International Corporation (SMIC) and was operating beyond the limits imposed by the United States. According to Douglas Fuller, an associate professor at Copenhagen Business School, SMIC likely used equipment stockpiled before the restrictions went into effect, equipment licensed for producing chips for companies other than Huawei, and spare parts acquired through third-party vendors.

Chinese social media commentators and news sites view the release of this smartphone as evidence that U.S. restrictions cannot hold China back from developing its own technology. The phone’s launch coincided with renewed statements of cooperation and communication between American and Chinese officials. Chinese officials called for the removal of chip export restrictions, but Secretary Raimondo maintained a firm stance, emphasizing that the United States prioritizes national security over compromise.

During her visit to China, Secretary Raimondo set up a dialogue to share information on U.S. technology controls. While this step aims to encourage Chinese compliance, it does not imply a weakening of export controls. Secretary Raimondo also met with Chinese Premier Li Qiang, who had visited Huawei before her visit. The release of Huawei’s new phone raises questions about the future stance of the U.S. Department of Commerce. Will they continue to seek goodwill with Chinese officials, or will they adopt a more aggressive approach in cracking down on China’s access to American technology?

Experts believe that Huawei’s development of this phone does not necessarily indicate a huge leap in Chinese technological prowess or a failure of U.S. export controls. Chinese firms have found ways to work around the limitations imposed on them, using older machinery to create more powerful chips. However, these methods are time-consuming and result in a higher proportion of faulty chips, limiting production scale. Analysts suggest that this is only the beginning of a much longer struggle for China’s semiconductor industry to reinvent parts of the global supply chain without relying on U.S. technology.

The progress made by Huawei is a result of longstanding U.S. policy, including licenses that allow companies to continue selling advanced technologies to firms on the Commerce Department’s entity list, such as Huawei and SMIC. From January to March 2022 alone, the Commerce Department approved licenses for the sale of $23 billion worth of tech products to these blacklisted companies. As a result, Representative Mike Gallagher has called for an end to all U.S. technology exports to both Huawei and SMIC.

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