China has been trying to produce its own high-end semiconductors for a while now, and it seems its efforts are bearing fruit. Satellite images reveal that Huawei is building an advanced chip factory to produce phone CPUs and AI processors.

Huawei had already made ripples by announcing its powerful new AI chip last month, challenging NVIDIA. And the upcoming factory makes it clear that the company is serious about its semiconductor ambitions.

The semiconductor arms race

Currently, very few companies and countries have the technology to produce the chips we use in various devices. Taiwan is the biggest player, making the cutting-edge chips for Intel, AMD, and NVIDIA that are used in PCs.

Samsung and other South Korean companies also manufacture a significant number of chips, mainly used in smartphones and other types of computing devices.

This means China (like the US) is forced to import this critical resource, placing it at the mercy of its trading partners. A situation that worsened as the US restricts China’s access to advanced chips.

In response, China has been working to develop its own semiconductor manufacturing capability. As chip fabrication is heavily tech-dependent, this process has been slow going.

China’s improving technology

Huawei’s new advanced chip factory is just the latest in a long string of technological victories for China. The country has been steadily improving its chip technology, working on better and smaller wafers.

Huawei has reached the 7nm milestone, with its Ascend 910C competing directly against NVIDIA’s H100. While this is still far from the 2nm process being used to fabricate the latest PC chips, it is suitable for making AI processors.

What we know about Huawei’s new factory

Huawei is already a well-known OEM manufacturer based in Shenzhen, China. But since advanced chip fabrication is a very different process, the company is setting up a new facility for this.

The company is developing three sites in Guanlan at once. This follows China’s methodology of putting the whole supply chain close together for maximum efficiency.

One of these sites is for SiCarrier to produce chip-making tools, while another is for SwaySure to manufacture memory modules. The final site is where Huawei is setting up a mega facility for chip production.

This factory will utilize Huawei’s 7nm SoC process, already seen in nearby foundries of the company. The ramped-up production is likely to meet the demand of its Kirin and Ascend lines of chips. These are currently Huawei’s best bet against Western competitors like NVIDIA.