[The Epoch Times, January 15, 2022](Reported by Ye Shuang and Wang Jiayi, reporters from The Epoch Times Special Department) Shortly before the US imposed sanctions on Huawei, Huawei established the Hubble Technology Investment Company. In the past three years, Hubble has invested in 56 chip companies, and China has also launched a vigorous core-making movement, but it has ended in failure.
On April 23, 2019, Huawei invested in the establishment of a wholly-owned subsidiary, Hubble Technology Investment Co., Ltd., with a registered capital of 700 million yuan and its registered place in Futian District, Shenzhen. The incident comes a month before the U.S. imposed sanctions on Huawei.
In May 2019, the US banned Huawei from importing products with a US technology content higher than 25%. But TSMC continues to manufacture chips for Huawei. In order to close this loophole, on May 15, 2020, the United States escalated sanctions, requiring that any chips produced using American technology and equipment cannot be sold to Huawei without the approval of the United States. This can be said to be a precise blow to Huawei’s chips. So far, TSMC has completely stopped supplying Huawei.
Hubble has invested in dozens of chip companies over the past three years. The Chinese media “Semiconductor Today” reported that in the chip investment circle, Hubble Investment is “famous for its wolf nature”. This radicalization became even more pronounced after Huawei was sanctioned for the second time. In 2020 alone, Hubble has invested in 25 semiconductor-related companies and has continued to go further upstream in the industry chain.
For example, in May 2019, Hubble invested in Ruishi Chuangxin, which produces RF front-end chips.
In July 2019, Hubble invested in Enrip Microelectronics, which produces high-speed, high-precision analog chips.
In August 2019, Hubble invested in Tianyue Advanced, which produces semiconductor silicon carbide materials.
In October 2019, Hubble invested in Tianke Heda, which produces third-generation semiconductor silicon carbide wafers.
Hubble has invested in 56 companies since its inception, according to capital markets research firm PitchBook.
According to an article by TrendForce’s Top Industry Research Institute, Hubble Technology can be said to be a special product of Huawei’s response to the US suppression crisis. Among the companies it invests in, it covers third-generation semiconductors, wafer-level optical chips, power management chips, clock chips, radio frequency filters and other fields, and these are areas where Huawei relies more on the US industrial chain. Under the continuous sanctions from the United States, in January 2020, Hubble Technology’s registered capital increased from 700 million yuan to 1.7 billion yuan, which is considered to be a signal to further increase investment in the industrial chain.
However, Huawei’s chip manufacturing capabilities have not improved. Entering 2021, the chip inventory is gradually exhausted, and HiSilicon has been unable to supply Huawei’s high-end 5G mobile phones. In August 2021, Huawei officially released the P50 series of mobile phones. Due to the shortage of chips such as the Kirin 9000, Huawei adopted the Qualcomm Snapdragon 888 processor and Kirin 9000 chip on the P50 series. At the same time, due to the lack of 5G radio frequency devices, even the P50 series equipped with Kirin 9000 5G SoC cannot support 5G.
In January 2022, Chinese media outlet Weibo reported that the independent supply chain system in mainland China is still difficult to meet the requirements of Huawei and SMIC, so the operation of the two companies still needs to apply to the United States to import some key products, materials and equipment.
Under the pressure of the “broken core” in the United States, not only Huawei has invested heavily in chip companies, but the whole of China has launched a core-making movement. In 2020, Chinese semiconductor companies raised the equivalent of nearly $38 billion through public offerings, private placements and asset sales, more than double the 2019 total.
In the same year, more than 50,000 Chinese companies registered semiconductor-related businesses, four times the total five years earlier. These include companies that have nothing to do with chips, such as real estate developers, cement makers and catering companies — all of which are known as “chip companies” because of the government’s promises of tax cuts and subsidies for the chip industry.
Despite the dynamism of the core-building movement, at least six major chip construction projects in China, including Wuhan Hongxin (HSMC) and Jinan Quanxin, have failed in the past three years, and some have never even produced a single chip. At least $2.3 billion has been invested in these projects, most of which came from the government.
Ji Lin, a Japanese commentator on current affairs, told The Epoch Times: “The success of Chinese companies in the home appliance industry has given many people the illusion that as long as they have a lot of money and can buy equipment and poach talents, there is no field where they cannot succeed.”
In 2020, Lu media “First Financial” reported: “The construction site of Wuhan Hongxin Factory, a semiconductor foundry in the national industrial base of Wuhan, China, has no vehicles.” The area is equivalent to 59 football fields (424,000 square meters) on the site with only three barely constructed building frames.
Wuhan Hongxin once boasted that it will build 14-nanometer and 7-nanometer production lines in the Wuhan Industrial Park, with an annual output of 60,000 wafers. However, among the global semiconductor manufacturers so far, only Samsung and TSMC have been able to achieve mass production of the 7nm process.
After Wuhan Hongxin broke the 100 billion scam, in 2021, Quanxin Integrated Circuit Manufacturing Company, which invested nearly 60 billion yuan, has become an unfinished project again. The media broke out that the initiator of “Hongxin” and Quanxin was the same person named Cao Shan. Since 2018, he has successively established Zhuhai “Yixin”, “Yunxin”, Hubei “Tianxin” and Jinan “Quanxin”. Quanxin Integrated Circuit Manufacturing Company is listed as a key project in Shandong, and the state-owned capital has invested more than 500 million yuan.
The high-end technology industry has been played by Chinese businessmen as a money-making game, making China’s chip industry “just throw money and see nothing.” According to statistics from Lu Media in October 2020, in more than a year, China has suspended 6 semiconductor planning projects of more than 10 billion yuan.
In this atmosphere of misappropriation, many chip talents put down silicon chips and follow the trend to invest, resulting in a strange situation: the most important thing in the semiconductor industry is investors. Therefore, there is a joke in the industry that “there are more semiconductor students in Lujiazui than Zhangjiang”. In Zhangjiang, Pudong, at the gate of a large chip design company, technical men often hear strangers whispering in their ears: “Little brother, do you want to change jobs?” “Big brother, do you want to start a business?”
The article from Xinmou Research Company said that the frequency of job-hopping of engineers in Taiwan and overseas is relatively low. They concentrate on research and development, make products, and develop better products with craftsmanship and accumulation over time, which enhances the competitiveness of overseas companies. The article quoted the founder of a start-up company as saying that Chinese engineers are not only expensive and highly mobile, but also the gap between them and overseas engineers is getting bigger and bigger.
Ji Lin believes: “Nowadays, the whole society in China has an ethos of making quick money, and outstanding college graduates want to enter the lucrative financial industry and stable government departments. Given the impetuous ethos of the whole society, it is not surprising to fail. ”
Responsible editor: Lian Shuhua#
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