Huawei builds chip research and development center in Shanghai

China’s tech company spends billions and snaps up talent in battle against US crackdown.

Huawei Technologies is building a massive semiconductor equipment research and development center in Shanghai as the Chinese tech titan continues to bolster its chip supply chain to counter a US crackdown.

The center’s mission includes building lithography machines, equipment vital to producing next-generation chips. Washington’s export controls have drastically reduced Huawei’s access to this equipment, whose production is dominated by just three companies: ASML from the Netherlands and Japan’s Nikon and Canon.

For staff at the new center, Huawei is offering salary packages worth up to twice what local chipmakers, industry executives and sources briefed on the matter have told Nikkei Asia. The company has already hired several engineers who have worked with leading global chip tool makers such as Applied Materials, Lam Research, KLA and ASML, they said, adding that chip industry veterans with more than 15 years of experience at leading chip manufacturers Chips like TSMC, Intel and Micron are also among the recent and potential hires.

Washington’s stricter export controls in recent years have also had an impact on the job market in China, including making it more difficult for Chinese citizens to work for foreign chip companies in the country. This left more chip talent available for Huawei and other local companies to choose from.

But while Huawei’s compensation package is generous, its work culture can be challenging, according to chip industry managers.

“Working with them is brutal. It’s not 996 – that is, working from 9am to 9pm, six days a week. … It will literally be 007 – from midnight to midnight, seven days a week. There are no days off at all,” a Chinese chip engineer told Nikkei Asia. “The contract will be for three years, [mas] most people won’t make it through renewal.”

Semiconductor equipment, like the chips themselves, has been caught in the crosshairs of US export controls. Washington has pressured allies Japan and the Netherlands to implement similar restrictions on the export of advanced chip tools to limit China’s access to them.

These restrictions have encouraged many Chinese chipmakers to look for domestic alternatives whenever possible. Naura, China’s leading semiconductor equipment supplier, has seen its revenue more than quadruple since 2018 and is expected to report another record year in 2023.

Huawei also responded to the US crackdown by aggressively bolstering its domestic capabilities.

Its new R&D center is located in Qingpu district in western Shanghai, sources familiar with the matter said, on a spacious campus that also houses a major chip development center and the new headquarters of HiSilicon Technologies, the design unit. of Huawei chips. There are also research centers for wireless technologies and smartphones on site.

Total investment for the entire R&D base will reach about 12 billion yuan ($1.66 billion), according to the Shanghai government, which has listed it as one of the city’s top projects for 2024.

The campus covers about 224 football fields and is almost twice the size of the company’s renowned Ox Horn Campus, a European village-style location in the Chinese city of Dongguan. Like Ox Horn, the Shanghai campus will include trains to travel between campus buildings. When completed, it will be able to accommodate more than 35,000 high-tech workers, according to the People’s Government of Qingpu District in Shanghai Municipality.

Huawei said it had no comment in response to Nikkei Asia’s request for comment on its chip equipment efforts and referred questions about its R&D campus to the Shanghai government.

Huawei’s R&D spending in 2023 reached a record 164.7 billion yuan, accounting for 23.4% of its total revenue.

Before the US added Huawei to its trade blacklist, the company primarily focused on chip design and partnered with global production partners like TSMC and Globalfoundries for manufacturing. After its access to American technologies was restricted, Huawei turned to Chinese chipmaker SMIC and local chip developers. It is now venturing into chip production with partners backed by local governments in several Chinese cities such as Shenzhen, Qingdao and Quanzhou, Nikkei first reported. It has also invested in many local chip material suppliers.

Huawei has been one of the most aggressive Chinese companies in terms of using local suppliers and investing in domestic alternatives, analysts say.

Brady Wang, semiconductor analyst at Counterpoint, said Huawei has been working hard to localize its chip-related sources and switch to local components from suppliers such as BOE Technology and Omnivision. “They invested more in HiSilicon and introduced chips for phones and servers,” Wang said. “They will strive to localize a larger portion of their semiconductor supply chain. However, carrying out these efforts, especially those related to chip manufacturing and equipment, will be a time-consuming task.”