China’s No. 2 telecoms equipment producer ZTE has been secretly beefing up its chip design skills as a US crackdown continues to hamstring its bigger local competitor, Huawei Technologies.
According to individuals familiar with the topic, ZTE has been creating its own base station processors and utilising Taiwan Semiconductor Production Co.’s superior chip manufacturing and packaging technology.
Since trade and technology tensions between the US and China erupted three to four years ago, the Hong Kong-listed corporation has been stepping up efforts to boost its IT skills, according to the sources.
Its activities are part of a broader trend in China’s tech industry, as competitors aim to take Huawei’s market share, which the US has placed on a trade blacklist over suspected military links. Building up in-house IT strength is also considered as a means to protect themselves from future geopolitical crises.
ZTE is concentrating on processors, the brains that drive everything from smartphones to servers.
To construct CPUs for its 5G base stations, the business has been using some of TSMC’s most sophisticated chip fabrication technologies, known as 7-nm technology. According to sources, it also employs the Taiwanese chipmaker’s sophisticated chip packaging technique, which involves stacking chips with diverse functionalities into a single package.
In its annual report, ZTE stated that it increased market share in China for storage solutions, core networks, and servers, three sectors where Huawei is a major competitor. ZTE, like local competitors Inspur, Huawei, and Lenovo, does not yet have a substantial foothold in the global server market, but it claims that revenue for server and storage solutions more than quadrupled in the first three quarters of 2021 compared to the same period last year.
For three years in a row, the firm’s servers earned the greatest market share in China Mobile, the country’s major mobile carrier, which the company claims are proof that its server business has established itself as a credible local player.