When Beijing officials pleaded with U.S. Secretary of Commerce Gina Raimondo for an exemption from technical sanctions, she stood firm.
“Of course I said no,” Raimondo told reporters during her recent trip to China. “We are not negotiating on national security matters.”
However, the balance of power changed 48 hours after her visit, when the Chinese sent a message designed to show US officials that they did not have as many cards in their hands as they thought.
On August 29, as Raimondo shook hands with Li Qiang, China's prime minister and de facto number two politician, telecoms giant Huawei announced a new smartphone that appears to be a mockery of US sanctions.
Containing high-tech chips that were previously considered out of reach for China, the Mate 60 Pro represents a staggering leap that the administrations of Donald Trump and Joe Biden have been trying to prevent for years.
Huawei unveiled its new Mate 60 Pro smartphone during US Secretary of Commerce Gina Raimondo's visit to China. Photo: Andy Wong/Pool via REUTERS
Huawei's new phone and its core chip have prompted Chinese state media to brag that America's “extreme crackdown” policy has failed.
Experts in Washington are now concerned that Beijing's efforts to develop its own advanced technologies will allow China to take a significant step forward when it comes to advanced weaponry and artificial intelligence, an area considered a key battleground for both cybersecurity and information warfare.< /p>
Microchips, made from materials known as semiconductors, are used in everything from smartphones to washing machines and even cruise missiles. They will also form the basis of future technologies, including artificial intelligence.
The chips in the Mate 60 Pro are believed to have been manufactured by Shanghai-based Semiconductor Manufacturing International Corporation (SMIC), a company that came under U.S. sanctions in 2020 for alleged ties to the “Chinese military-industrial complex.” SMIC denies cooperation with the military.
The West still has the upper hand in developing cutting-edge chips, and ally Taiwan is considered the world leader in manufacturing. But there are fears that China is catching up: Beijing sees chips as the centerpiece of its plan to dominate a plethora of technologies around the world.
1904 Western chip production dwindles
Yan Wang, senior analyst at Counterpoint Research, says : “If Huawei were truly capable of developing a 5G-enabled smartphone, it would have far-reaching implications for the industry.”
“That would signify China's early success. make important links in the semiconductor value chain despite US sanctions.”
The most important factor in any semiconductor is size, or the ability of manufacturers to fit more and more processing power into the same amount of space. On this scale, transistors on a chip are measured in nanometers, and the smallest are the most powerful. (One nanometer is equal to one billionth of a meter.)
Apple's latest iPhone chips, manufactured by Taiwan Semiconductor Company, use a four-nanometer processor.
It used to be that China only mastered 14nm chips at best, and US sanctions restrict the company from importing 16nm technology from the West.
However, the Huawei Mate 60 Pro's small CPU uses a 7nm chip. TechInsights, the US firm that disassembled the device to analyze it, said Huawei's phone chip was the most advanced it has ever seen from a Chinese manufacturer.
Washington is now trying to figure out how the company engineered such a flip.
One of the answers offered on Wednesday by a leading US lawmaker was an illegal violation of sanctions.
“It looks like they did,” Michael McCall, a Republican who chairs the House Foreign Relations Committee, said when his was asked if SMIC violated sanctions. He suggested that Congress launch an investigation.
Jake Sullivan, the US National Security Adviser, said on Tuesday that the White House is seeking “more information.”
Republicans called on Biden to tighten sanctions on two Chinese companies after an apparent breakthrough in chip production. Mike Gallagher, chairman of the Congressional Committee on China, says: “The time has come to end all exports of US technology to both Huawei and SMIC to make it clear that any firm that violates US laws and undermines our national security will be cut off from our technologies.
Meanwhile, South Korean company SK Hynix has also launched an investigation to determine how its memory chips ended up in the new Huawei phone. A spokesperson told Bloomberg that SK Hynix terminated all of its contracts with Huawei after the US first imposed sanctions on the Chinese company.
On Wednesday, The Telegraph reported that SMIC declined to comment.
>Some analysts believe that SMIC's 7nm chip may be part of a limited series of prototypes used for propaganda purposes.
China's semiconductor manufacturing equipment imports by country
Experts are skeptical that the manufacturer has actually been able to solve the problem of true mass production, noting that it took years for Western chipmakers to cope with the difficulties of stacking so many transistors on a tiny a piece of silicon.
However, there are signs that production may ramp up. Huawei has already been accused of building a number of “secret” factories across China under the names of other companies in an attempt to circumvent US sanctions and import the necessary technology. Huawei declined to comment on these reports.
At least the Mate 60 Pro is a PR victory for Beijing.
“The resurgence of Huawei smartphones after three years of enforced silence is enough to prove that U.S. tough crackdown has failed,” the Global Times, the mouthpiece of Beijing, said in an editorial last week.
“Recently, some US media enthusiastically fanned the hype that Huawei is building a “secret” chip factory. Ultimately, it's all about failing to see or believing the general trend, and they stick to the outdated notion that all technology from Chinese companies has been “stolen.”
“Essentially, this is the technological arrogance of Washington, and the US will definitely pay for this arrogance.”
Dr. Mann Virdi, Research Fellow at the Geostrategy Council for Science and Technology, said: “At first glance, this is a victory for Huawei, which shows that China is successfully developing its domestic chip ecosystem and technical capabilities.
“The fact that they've been able to do this is a sign of significant progress and is a blow to US efforts to limit that progress.”
Dan Hutcheson, vice chairman of TechInsights, says this breakthrough is likely to will entail even tougher sanctions as the Biden administration struggles to prevent further progress.
“The result could probably be even more severe restrictions than those that exist today,” he said.
At the moment, the Chinese nationalists are gloating. Chinese netizens joked last week that Raimondo had become a brand ambassador for Huawei given her launch travel time.
Since the Commerce Minister's plane took off from China last week, this was probably not the case. the image she hoped to create.