Now that U.S. President Donald Trump has control over shipments of chipsets to Huawei, the latter is going to have to come up with alternative plans if it wants to keep producing high-end phones. The manufacturer obviously sensed that something was going to happen because last month we told you that it had started moving some chip production for its mid-range phones to SMIC. The latter is the largest foundry in China and because it produces chips using equipment totally covered by Chinese intellectual property, the U.S. should not be able to determine whether SMIC can ship chips to Huawei.

SMIC’s most cutting-edge chips are currently produced using the 14nm process node

The process node is based on the transistor density of a chip. At 14nm, approximately 35 million to 40 million transistors fit in a square mm. TSMC’s 5nm chips (like the Apple A14 Bionic and the upcoming Kirin 1012) pack 171.3 million transistors into a square mm. The more transistors inside a chip, the more powerful and energy-efficient it is. Speaking of TSMC, back in March there was a report that the Trump administration was asking the foundry to built a plant in the states and announce it before the election. The Wall Street Journal announced last week that the world’s largest independent foundry will soon announce its intention to build a factory in Arizona that will start production of 5nm chips in 2023.

Almost exactly a year ago, the U.S. Commerce Department placed Huawei on the Entity List blocking it from accessing its U.S. supply chain. This prevents the company from licensing Google Mobile Services and allowing apps like the Google Play Store, Google Maps, Google Search, Gmail, Drive, and others from running on its phones. This doesn’t matter in China where most Google apps are banned anyway. However, it does make a difference to those purchasing an international version of a Huawei phone. Still, Huawei managed to increase its smartphone shipments by 17% during 2019. After delivering 240 million phones last year, Huawei surpassed Apple to become the second-largest smartphone manufacturer in the world topped only by Samsung.

The U.S. considers Huawei to be a national security threat because of its perceived ties to the communist Chinese government. Besides ranking as the world’s second-largest smartphone manufacturer, the company is also the largest supplier of networking equipment in the world; the U.S. has warned its allies not to use Huawei’s equipment to build out their 5G networks.