Huawei’s next move is the Chinese chip worker riddle

Hi everyone! I’m Ting-Fang from Taipei. This week, I had a chance to tune in to US chip maker Nvidia’s annual tech conference, where it unveiled its latest chip platform for autonomous driving.

Nvidia has described its Drive Thor, an automotive-grade system-on-chip, as providing Tier 4 autonomous driving capabilities. The most advanced cars on the market are still at Tier 2 and Tier 3, which means who can drive on their own only in limited circumstances.

But just as interesting as Nvidia’s tech is its customer list. The first customer for Drive Thor will be Zeekr, the premium electric vehicle brand of leading Chinese carmaker Geely. Executives from several other Chinese electric vehicle manufacturers cheered the chip’s debut, with one hailing its “unprecedented level” of AI capability.

Drive Thor’s enthusiastic reception underscores China’s willingness to continue using state-of-the-art American chipsets in its self-driving cars and other products, even as Washington further restricts access to advanced technology.

Huawei continues to fight

Perhaps no other company in China is fighting so urgently to decouple from the United States. Formerly a major smartphone maker, Huawei was banned from using American technology without specific approval and lost access to some of its major global partners, including Taiwan’s TSMC.

The Chinese company’s latest attempt to overcome these headwinds is to get its telecom equipment chips back into production this year, Nikkei Asia’s company Cheng Ting Fang writes.

For this, Huawei has partnered with several chip makers across China, with a focus on those that are also blacklisted by the United States. To speed up the process, Huawei has even redesigned its core chips to be produced with the old 28nm process technology as such manufacturing is easier to find domestically.

The company is also courting international allies on its path to decoupling from the west. This year, Huawei moved its annual tech showcase to Bangkok, where it was warmly welcomed by officials from Thailand, Indonesia, the Philippines and Bangladesh. All four countries allowed local mobile network operators to purchase 5G equipment from Huawei, despite safety warnings and bans issued by the US and European governments.

The Chinese chip cools down

China’s semiconductor industry, which suffers from a stuttering economy and redirected industrial funding, must scale back its hiring plans despite a talent shortage, writes the Financial Times’ Qianer Liu.

According to the China Semiconductor Association, the decline in the number of chip workers will exceed 250,000 this year and reach 300,000 by 2025. Driven by this huge skills gap and Beijing’s support, Chinese chip companies had hired workers who they changed careers, but found that under-skilled employees created more problems than they solved.

Now, these companies are cutting their hires as the economy deteriorates and funding becomes more difficult to secure. Startups have been particularly hard hit, especially compared to large state-owned enterprises, and are hiring far fewer staff to ensure survival. Enterprise data provider Qichacha revealed that more than 3,400 Chinese chip-related companies have plummeted so far this year, surpassing the total for all of 2021.

China has been trying for years to accelerate the development of the home-grown chip industry to decrease its dependence on imports. But the chaotic and cold labor market should alarm the Chinese leadership, as it seems to lengthen the time it takes for the country to achieve semiconductor self-sufficiency.

Verification of audits

US inspectors are in Hong Kong to review audit records of selected US-listed Chinese companies. Their arrival followed an agreement between Washington and Beijing to settle a long-running dispute over such companies. The US insists its officials have access to their auditing accounts, while China believes the records are too sensitive to share.

Recently arrived inspectors may decide to look at any of the approximately 200 Chinese companies with American listings, including major technology companies such as Alibaba Group Holding and JD.com, Nikkei Asia’s company. Cissy Zhou writes. If they are not satisfied with what they see, the forced delisting of Chinese companies could follow.

Given the tensions between Beijing and Washington, will the world’s largest financial market continue to attract Chinese prices? Last year, 38 Chinese companies began trading stocks in the United States, resulting in more than $ 13 billion in combined IPO proceeds. This year, 10 did so, raising a total of just $ 400 million.

The uphill battle of Vietnam

Vietnam has a tech manufacturing sector that many countries would be proud of. High-tech goods accounted for more than 40% of its exports in 2020, and the more than 20 Apple suppliers who operate manufacturing facilities there play a pivotal role in the production of AirPods and Apple Watches. The country is also a key manufacturing base for Samsung Electronics’ smartphone business.

Yet none of these facilities are operated by Vietnamese suppliers, highlighting the dilemma the country faces, writes Nikkei Asia’s Lien Hoang. While US-China tensions have helped fuel a boom in local tech investment, Vietnam is struggling to foster a native high-tech sector.

The Southeast Asian country hopes to follow in China’s footsteps. Its larger neighbor, once dubbed the factory of the world, has harnessed its manufacturing power to create a thriving national tech sector. China-based companies now form the largest group in Apple’s official supplier list, surpassing Taiwan and Japan.

The question is whether Vietnam can unleash its potential, or whether it will languish further down the scale as an “assembly platform” valued primarily for its cheap labor.

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