Huawei Could Avoid US Sanctions With the Help of a Covert Chip Start-up


When the US government designated Huawei Technologies Co. as a national security risk, the Chinese firm was barred from purchasing American semiconductors and other essential technologies.

 According to people familiar with the situation, the Chinese technology behemoth is assisting a startup in its hometown of Shenzhen that has bought chipmaking equipment, including from foreign suppliers, for a semiconductor production plant. According to one of the sources, PXW plans to take possession of the equipment as early as the first half of 2023.

The low-key PXW has already piqued the interest of the US Commerce Department’s Bureau of Industry and Security, which oversees American trade regulations. If the company intends to supply Huawei, the chipmaking equipment it may purchase from American suppliers will be severely limited.

It has more leeway in acquiring machines from overseas vendors like as ASML Holding NV and Tokyo Electron Ltd., however they may also require US permission depending on the amount of American technology included into any products sold.

PXW stated in a statement that it had signed agreements with suppliers and plans to begin manufacturing in 2025, but did not name any clients. According to one source familiar with the company’s strategy, the company aims to begin working on its 28-nanometer technology next year, which is six generations behind the most modern manufacturing.

Prior to the blacklisting, the company was the world’s leading supplier of mobile communications equipment, competing in the smartphone market alongside Apple Inc. and Samsung Electronics Co. Ren stated in an internal employee message earlier this year that the company is finding it increasingly difficult to grow in the face of American sanctions.

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