Huawei Suspected of Trying to Sidestep US Sanctions Using a Startup

Huawei remains a blacklisted company by the US government, but that apparently hasn’t stopped it attempting to circumvent sanctions to get its hands on more advanced chips.

As Bloomberg reports(Opens in a new window), Huawei is thought to be “providing support” for a local startup called Pengxinwei IC Manufacturing Co. (PXW) which was founded in 2021. Why is that raising eyebrows? Because PXW is run by a former Huawei executive, is located close to Huawei’s headquarters in Shenzhen, and is ordering chipmaking equipment in order to build a semiconductor fab. Those orders include foreign suppliers, which Huawei no longer has access to.

It’s currently unclear if PXW’s plans violate US trade sanctions with China, but the US Commerce Department’s Bureau of Industry and Security (BIS) has the startup on its radar. The relationship with Huawei hasn’t gone unnoticed, with BIS explaining:

“BIS is constantly on the lookout for efforts to evade export controls, including those related to parties on the Entity List like Huawei, and uses open-source, proprietary and classified information to substantiate and then, when appropriate, apply our administrative or criminal law enforcement as well as regulatory tools to address violations.”

If PXW is allowed to import foreign equipment to manufacturer semiconductors, the company expects to start producing 28nm chips in 2025 (14nm and 7nm chips are also planned after that). It’s unclear if Huawei will be a customer for those chips, but the strong link between the two companies at this early stage suggests Huawei would likely benefit from PXW’s success, especially when it comes to producing networking hardware.