On Monday, Huawei Technologies, a company that has long been under pressure from the United States to do business around tough new export restrictions, made a major leap in chip design strategy. The company stated 1.4 nanometre processes in the next 5 years, for its high end chips. The announcement, which was given at a semiconductor symposium held in Shanghai, marks a change in Huawei’s strategy for maintaining its competitive edge, without being dependent on traditional manufacturing processes that are barred by U.S. sanctions.
A grasp of why this is important requires a view of the geopolitical and technological parameters. Huawei has been barred from many U.S. origin technologies since being added to the U.S. trade blacklist in 2019, such as advanced chips, software and global contract chip manufacturers. The company slipped into “extreme survival mode,” and a secret project to build backup chips, led by Huawei’s president of semiconductor business He Tingbo and head of the company’s Scientist Committee, emerged as one of the cornerstones of the company’s survival. That survival tactic has now turned into something more grand, a longer term road map which is at odds with the very assumptions of how chips should be improved.
Transistors have long been the industry’s preferred method for increasing the functionality of a chip by shrinking its components. However, Huawei says this is increasingly limiting physical and economic possibilities. Instead, the company came up with a new concept they called the “Tau Scaling Law”, which emphasized the speed at which data and signals can flow through chips and computer systems. The concept is an innovative one that is practical, even if you can’t make transistors smaller and smaller, you make the wires between the transistors faster and more efficient. “He is moving away from the traditional node driven scaling to system level efficiency scaling,” said He Hui, director of semiconductor research at Omdia. “It’s a viable approach to get more performance when silicon lithography is limited, rather than simply going for smaller transistors.”
The new chips from Huawei, which will be available later this year, will be the first to use a related architecture Huawei calls LogicFolding. The company said that this would reduce the amount of wiring within the chips and would greatly enhance performance. A small group of researchers at Huawei has been working on the Tau Scaling Law for six years, designing and mass producing 381 chips for use across the smartphone, AI computing and more. This isn’t some theoretical approach to teaching students; it’s a strategy that works and is already paying off.
It’s also interesting to note the timing of the announcement. Washington has been blocking China’s access to advanced lithography tools and other crucial semiconductor technologies, making it seem unlikely that Beijing will be able to make it to the global cutting-edge of chipmaking through traditional manufacturing. World’s largest chipmaker Taiwan Semiconductor Manufacturing Co., Ltd. is running the most advanced manufacturing processes, and anticipates to start mass production with 1.4 nanometre chips in 2028. While the way it’s getting to 1.4 nanometres is different, Huawei is in the same league as the world’s leading players, aiming to be there around 2031.
The significance of this progress goes beyond the immediate impact on the game, as it aligns with China’s broader aspirations in the field of artificial intelligence. The Ascend family of chips has grown more pivotal for the powering of Chinese artificial intelligence models, especially DeepSeek’s new flagship model V4, which was unveiled last month. In October the company also announced a long-term development plan for its Ascend series, indicating that this is a continued and ongoing adventure to create a home-grown rival to Nvidia for more than a year. The risks are immense, because frontier technologies are playing an increasingly significant role in the economic growth and geopolitical advantage of the future, and they are gaining in importance for China.
Investors seem convinced. Shares of China’s biggest contract chipmaker, Semiconductor Manufacturing International Corporation, rose 7.6 percent on Monday following Huawei’s announcement of its LogicFolding architecture. The rally is a sign of newfound confidence in Huawei and its Chinese partners that they are making real progress despite the restrictions. However, analysts warn China still does not have the most advanced process technology available anywhere in the world. The gap has shrunk but it is not ended.
