A leading association of global chip companies is warning that Huawei Technologies Co. is constructing a network of secretive chip-making facilities across China. This shadowy manufacturing network could enable the affected entities to circumvent US sanctions and further bolster the nation’s technological ambitions.

Huawei, the controversial telecom equipment manufacturer at the heart of tensions between the US and China, entered chip production last year and, according to the Semiconductor Industry Association (SIA), is estimated to have received around $30 billion in state financing from the Chinese government and its home city of Shenzhen.

The Washington-based association stated that the company has acquired at least two existing factories and is building at least three more, as revealed in its presentation to members, obtained by Bloomberg.

The US Department of Commerce added Huawei to its entity list in 2019, effectively barring it from cooperating with US companies in most situations.

However, if Huawei is indeed building and acquiring facilities under different company names and concealing its involvement, as claimed by the Semiconductor Industry Association, the telecom giant could sidestep these restrictions and indirectly purchase American chip-making equipment and other goods that would otherwise be prohibited.

The Bureau of Industry and Security within the Department of Commerce responded to Bloomberg’s queries regarding the SIA’s warning, which had not been publicly disclosed.

It stated that it is monitoring the situation and is prepared to take action if necessary.

The department has previously blacklisted dozens of Chinese companies apart from Huawei, including two that the SIA claims are part of Huawei’s network – Fujian Jinhua Integrated Circuit Co. and Pengxinwei IC Manufacturing Co., also known as PXW.

Source: Bloomberg.com