Huawei says it has found a workaround to US chip export controls by developing alternative semiconductor manufacturing methods that don't rely on banned equipment from Dutch supplier ASML. The Chinese tech giant announced it will begin mass-producing 1.4-nanometer chips by 2031, a capability that would match what industry leaders like TSMC, Intel, and Samsung are targeting for the same timeframe, but through an unconventional path that sidesteps the need for extreme ultraviolet (EUV) lithography machines that are currently off-limits to China.

The announcement marks a significant moment in the ongoing US-China tech competition. For years, the consensus in the semiconductor industry has been that ASML's EUV machines are essential for producing the most advanced chips needed to power cutting-edge artificial intelligence systems. Huawei's claim that it can achieve similar results without this equipment challenges that assumption and suggests the company may have found a genuine alternative path forward.

What Is Huawei's New "LogicFolding" Technology?

Huawei's semiconductor chief He Tingbo unveiled the company's strategy during a chip conference, explaining that the new approach focuses on improving computing efficiency rather than simply shrinking transistors smaller. The company calls this architecture "LogicFolding," and it works by stacking multiple layers of circuits inside a single chip and optimizing how data moves between those layers.

The underlying principle is based on what Huawei calls the "Tau Scaling Law," a framework the company developed to replace Moore's Law, the decades-old guideline that has governed the global semiconductor industry. Moore's Law predicted that the number of transistors on a chip would roughly double every two years, but many industry experts, including He, acknowledge that this pace has slowed significantly in recent years.

"Our solution is feasible and affordable," said He Tingbo, Huawei's chip arm president.

He Tingbo, Chip Arm President at Huawei

According to Huawei, the company has spent six years refining this technology and has already designed and mass-produced 381 different chip models using the Tau Scaling Law approach. The first consumer product to use LogicFolding will be the Kirin mobile chip launching this fall.

How Is Huawei Using Alternative Packaging to Increase Storage Capacity?

Beyond processor chips, Huawei has also demonstrated how alternative engineering approaches can overcome sanctions in other areas. The company recently released storage devices with capacities of 61.44 terabytes and 122.88 terabytes, with a 245-terabyte variant expected in the future.

What makes these storage devices noteworthy is not just their massive capacity, but the creative engineering behind them. Since Huawei cannot access high-layer-count 3D NAND chips from foreign suppliers due to US sanctions, the company developed a proprietary packaging technique called Die-on-Board (DoB) that mounts NAND memory chips directly onto the circuit board.

This approach allows Huawei to work around limitations imposed by US export controls. While competitors like Samsung have developed 3D NAND chips with more than 400 layers, these products use American technology and cannot be sold to Huawei. Instead, the Chinese company uses domestically produced YMTC chips with 232 layers, but compensates for the lower density by mounting more chips directly on the board.

Steps to Understanding Huawei's Semiconductor Strategy

• Constraint Recognition: Huawei acknowledged that US export controls have blocked access to essential equipment like ASML's EUV lithography machines, forcing the company to develop alternative manufacturing approaches.
• Architectural Innovation: Rather than trying to replicate traditional chip-shrinking methods, Huawei pivoted to stacking circuits vertically and optimizing data transmission speed between layers, a fundamentally different engineering philosophy.
• Packaging Creativity: For storage devices, Huawei developed Die-on-Board technology that mounts memory chips directly on circuit boards, increasing density without relying on advanced foreign-made NAND chips.
• Domestic Supply Chain Integration: The company works with Chinese suppliers like SMIC and YMTC to source components that are not subject to US sanctions, creating a self-sufficient ecosystem.

Why Does This Matter for the Global Chip Industry?

Huawei's announcements have already rattled financial markets. The Shanghai Star 50 Index, which tracks major Chinese chip firms, rose to a record high following He's announcement. Shares of SMIC, Huawei's manufacturing partner, surged more than 18 percent, while competitor Hua Hong Semiconductor jumped by its daily limit of 20 percent.

The potential implications are significant. If Huawei can successfully mass-produce 1.4-nanometer chips at scale using alternative methods, it would fundamentally undermine the logic behind US export controls. The entire strategy of restricting access to advanced equipment assumes that such equipment is irreplaceable. A successful demonstration that alternative paths exist could reshape how policymakers think about technology sanctions.

However, significant uncertainties remain. Huawei has not provided independent verification of its chip performance claims, and analysts note that the company has only achieved stable results with its stacking technology in the past year. The 2031 target for 1.4-nanometer production appears ambitious given the technical challenges involved, including heat management and the need for more sophisticated software to coordinate multiple circuit layers.

"Whether Huawei will gain a distinct advantage here remains to be seen, but it's at least an alternative path forward, a breakthrough Huawei managed to find while facing supply chain challenges," said Lian Jye Su, analyst at Omdia.

Lian Jye Su, Analyst at Omdia

Huawei still needs to work with data center operators and equipment vendors to prove that its approach works reliably at larger scales. Until then, the company's claims represent a promising technical direction with considerable execution risk.

What Does This Mean for US Export Control Strategy?

Huawei's semiconductor push is central to Beijing's broader effort to achieve technological self-sufficiency. The company has become a key player in building China's domestic semiconductor supply chain while simultaneously serving as a focal point in the US-China technology competition.

The US blacklisted Huawei in 2019 and tightened restrictions on China's access to advanced semiconductor technology in 2022. Rather than waiting for those restrictions to ease, Huawei has been forced to innovate rapidly, developing alternatives across multiple product categories from processors to storage devices.

If Huawei's alternative approaches prove viable at scale, it could create a dilemma for US policymakers. Export controls are designed to maintain technological advantages by restricting access to critical tools and components. But if companies can engineer around those restrictions through alternative architectures and packaging methods, the effectiveness of such controls diminishes. This dynamic may force a rethinking of how export controls are designed and enforced in the semiconductor industry.