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The worsening trade tensions between the United States and China and the role played by Chinese telecommunications giant Huawei Technologies Co. in the affair has put the company in the crosshairs of American sanctions. These sanctions, which intensified earlier this year, resulted in the United States Department of Commerce restricting Huawei’s access to critical semiconductor fabrication facilities operated by the Taiwanese fab TSMC (Taiwan Semiconductor Manufacturing Company).

As a result, the company’s plans of selling smartphones equipped with in-house processors, modems and other modules built on leading-edge manufacturing processes and capable of accessing next-generating fifth-generation (5G) cellular networks were affected at a time when the crucial technologies are in their early phases of a global rollout.

To that end, Huawei has now finalized plans for establishing its own chip fabrication facilities, with the first production line expected to be finalized by the end of this year.

Huawei’s Semiconductor Fabrication Project Dubbed Project “Tashan” Internally

The details come courtesy of an unconfirmed report on the Chinese social network Weibo, and they suggest that Huawei is working with several companies in the semiconductor supply chain as part of its efforts of building chips in-house. Prior to the U.S. sanctions, the company designed its products for smartphones and had them built through TSMC - a company that has solidified its status as the world’s premium chip fabrication firm owing to the critical node advantages that it offers x86 product designers such as Advanced Micro Devices Inc (AMD) and NVIDIA Corporation. TSMC is also responsible for providing Apple chips that power the company’s iPhones and iPads, with the Cupertino tech giant aiming to expand this to the MacBook Pro lineup next year.

As-per-the-report, Huawei’s first fabrication line will target the 45nm semiconductor node and it will be operational by the end of this year. Efforts to develop in-house chip fabrication have been termed as Project “Tashan” internally by Huawei, with Tashan meaning ‘daring’ or ‘courageous’ - a moniker that might we say is apt for the herculean task that lies ahead for the Chinese company.

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In addition to a 45nm manufacturing line, Huawei also plans to build a 28nm line, with the operational details of the latter being unclear at the moment. The 45nm line will operate without input from any American suppliers, and therefore it is unlikely to suffer from any sanctions.

The list of Huawei's partners for these efforts includes Shanghai Microelectronics, Shenyang Xinyuan (also referred to as Xinyuan Micro), Beijing Zhongkexin, Jignce Electronics and others. Shanghai Microelectronics builds its own lithography machines for manufacturing 28nm chips and Huawei entered into a partnership with the company at the end of June when it became clear that the Chinese Semiconductor Manufacturing International Corporation (SMIC) would be unable to adequately meet Huawei’s demand.

In addition to 28nm machines, Shanghai Microelectronics’ products are also capable of fabricating semiconductors on the 11nm node, and it also expects to introduce products capable of building 7nm chips.

Whether these products will have similar technical standards to the ones built by the Dutch company ASML Holding is uncertain. ASML’s machines are used by both TSMC and Intel Corporation for manufacturing semiconductors, and nm-based marketing terms for the products often carry with them different technical specifications despite having similar nomenclature.

Fabricating chips is only one part of the complex supply chain responsible for churning out the products used in gadgets. Prior to fabrication, silicon wafers have to be prepared and refined, with a dedicated set of companies responsible for producing the chemicals for this process spread all over the globe. Following fabrication, the products have to be packaged to ensure that they can be placed inside a gadget.

Apart from TSMC, only Samsung and Intel have the capability to build chips on the latest manufacturing technologies. Huawei’s Project Tashan faces a daunting task ahead as it looks to gain parity with established players in an industry that requires years of investment and research.