Following US sanctions in August 2019, Huawei’s internal operating system backup, HarmonyOS, emerged and has been in development for nearly 5 years. Currently, HarmonyOS is widely recognized, and its native version is set to launch on June 21st, marking the cornerstone of Huawei’s ambitious HarmonyOS project.

According to a report from UDN, Huawei is pursuing a dual-track development strategy for HarmonyOS. Internally, it focuses on its “1+8+N” terminal business strategy: “1” refers to smartphones, “8” includes large screens (TVs), tablets, PCs, wearables, car units, and more, while “N” covers a wide range of IoT devices. This approach aims to expand and flourish the HarmonyOS ecosystem.

In essence, HarmonyOS follows two main paths, while the first shares similar market positioning with current market leaders Android and iOS in the consumer sector, primarily focused on Huawei’s own terminal devices, aiming to expand the HarmonyOS ecosystem within the consumer domain.

The second path is OpenHarmony, also known as Open Source HarmonyOS. Reportedly, this initiative involves Huawei’s ecosystem partners leveraging Huawei’s donated OpenHarmony code base to develop their own commercial versions of HarmonyOS. These partners utilize their industry expertise and resources to vertically expand into sectors such as education, finance, transportation, and more. OpenHarmony primarily targets industrial applications.

Vertically, Huawei is reportedly looking to integrate HarmonyOS and OpenHarmony through foundational technology, establishing interoperability and connectivity to create an unified HarmonyOS. This strategic integration is designed to position HarmonyOS as a world-class operating system for the future IoT, aligning with Huawei’s ultimate goal of establishing HarmonyOS as a global IoT OS.

Recently, the unified device interconnection technology standards for OpenHarmony were officially released. Huawei’s Consumer Business Group Chairman, Richard Yu, recently disclosed plans to unify application and service ecosystems across Harmony OS and the commercial versions of OpenHarmony. This initiative aims to enhance consumer and industry experiences by sharing a unified HarmonyOS ecosystem that includes programming languages, compilers, and tools, thereby constructing a comprehensive smart terminal operating system.

Huawei is also said to be advancing another significant vertical initiative: the native HarmonyOS. Currently, Huawei has successfully developed the entire stack of HarmonyOS as an independent Chinese-made operating system, contrasting with the majority of global operating systems such as Android and iOS, which are based on the Linux or Unix kernel.

Huawei’s recent strides not only shape the future of HarmonyOS and OpenHarmony but also bolster Huawei’s autonomy and control. These developments are crucial for China’s tech enterprises, providing resilience against potential US sanctions. Whether in consumer or industrial sectors, the Mega HarmonyOS can be activated promptly, underscoring why numerous Chinese companies are joining the HarmonyOS ecosystem.

The intense price competition among Chinese mature process foundries is nearing its end. According to a report from the Economic Daily News, it has indicated that Hua Hong Semiconductor, the second-largest foundry in China, plans to raise prices by 10% in the second half of the year.

This marks the end of a two-year decline in mature process foundry prices, signaling that the industry is emerging from its correction phase and moving towards a healthier path. Consequently, Taiwanese foundries specializing in mature processes, such as UMC, VIS, and PSMC, are also expected to see a rise in their prices, boosting their operations.

Industry sources cited in the same report also note that due to geopolitical factors, Chinese foundries primarily focus on the domestic market, which is gradually diverging from the customer base of Taiwanese foundries. However, if Hua Hong’s price increase materializes, it would be a significant indicator.

Since the end of the COVID-19 pandemic, mature process foundry prices have been continuously adjusting downward. A price increase would indicate a rebound in demand for consumer electronics.

Reportedly, the industry sources believe that if the market for mature process foundries rebounds, UMC will be the primary beneficiary. As demand for consumer electronics and mobile phones picks up, related products such as OLED panel driver ICs, image signal processors (ISP), and WiFi chip will see improvements in inventory levels across the computer, consumer, and communication sectors, reaching healthier levels.

VIS and PSMC are also expected to benefit from the industry’s recovery trend. Although VIS does not comment on pricing issues, the company previously mentioned that inventory levels for consumer electronics are expected to return to normal by 2024. Despite ongoing adjustments in industrial and automotive inventories, the company remains optimistic about moderate growth in the second half of the year.

PSMC is anticipated to experience a gradual return of orders as well. The company emphasizes its commitment to adapting to market competition and continuously adjusting its production and sales strategies. With the positive effects of these adjustments becoming evident and customer inventory levels returning to healthy standards, along with new business opportunities at the Tongluo plant, PSMC expects its revenue to gradually recover.

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• [News] UMC Optimistic About Second Half Business Outlook, While AI Could Capture 10-20% Market Share
• [News] Foundries Face Price Pressure in Mature Process Amid Oversupply, Indicating Q3 Price Decline
  

(Photo credit: UMC)

Following an eight-month anti-subsidy investigation, the EU announced on June 12th that it will increase the temporary tariff rate on all Chinese electric vehicle companies from the current 10% to as high as 38.1%. According to a report from CNBC, the European Commission warned that if an agreement on automotive production capacity with China cannot be reached, the new tariffs will be implemented around July 4th.

Per the same report, the European Commission has announced the latest tariff rates, imposing additional tariffs on Chinese electric vehicle manufacturers BYD, Geely, and SAIC Group at rates of 17.4%, 20%, and 38.1%, respectively.

Other companies cooperating with the investigation will be subject to a 21% tariff, while non-cooperating companies will face tariffs as high as 38.1%. American automotive giant Tesla’s electric vehicles produced in China will be subject to a separate tariff rate following the investigation.

As per another report from BBC cited by Commercial Times, nearly 50% of the electric vehicles exported from China to the EU are from Western car brands such as Tesla, Volkswagen, and BMW, with Tesla alone accounting for about 40%. In contrast, the annual sales of Chinese electric vehicle brands in Europe are less than 200,000 units, with a market share of less than 8%, mainly represented by BYD, SAIC Group (which owns the European brand MG), and Geely.

Per a report from the Global Times on June 12th, China’s Ministry of Commerce strongly reacted, expressing discontent on the matter. China, reportedly, will closely monitor the EU’s subsequent actions and take all necessary measures to firmly defend the legitimate rights and interests of Chinese enterprises. The China Association of Automobile Manufacturers also expressed deep regret and stated that the decision is absolutely unacceptable.

Although the EU has decided to impose high tariffs on Chinese electric vehicles, there are still differing opinions among various parties. The German government and automotive industry have reacted most strongly, fearing it could ignite a China-EU trade war.

As per a report from Barron’s, German Transport Minister Volker Wissing stated that, “The European Commission’s punitive tariffs hit German companies and their top products. Cars must become cheaper through more competition, open markets and significantly better business conditions in the EU, not through trade war and market isolation.”

Per a report from Reuters, BMW Group Chairman Oliver Zipse stated that the European Commission’s decision to impose tariffs on Chinese electric vehicles is a wrong way to go. Volkswagen expressed that the European Commission’s decision detrimental to the current weak demand for BEV vehicles in Germany and Europe.

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• [News] EU Reportedly Delays Decision on Imposing Tariffs on Chinese Electric Cars
• [News] Punitive Tariffs on Chinese EVs by US Reportedly to Further Hinder BYD, Leapmotor and Others’ Global Expansion Plan, while EU Investigation Persists

(Photo credit: Pixabay)

The ongoing tightening of US restrictions on China’s access to advanced chips and production equipment may have significant impact on China’s semiconductor development progress. According to a report from Liberty Times, a top executive at Huawei, a Chinese tech giant, admitted that China’s ambitious semiconductor efforts may have reached a plateau. This statement has surprised many in the industry, as China has consistently expressed confidence in its semiconductor growth capabilities.

During the Mobile Computility Network Conference in Suzhou, China on June 9th, Zhang Ping’an, the Chief Executive Officer of Huawei Cloud Services, expressed concern that China, due to US sanctions, is unable to purchase 3.5nm chip equipment.

Recently, Huawei successfully mass-produced 7nm chips without using lithography technology. This development has surprised the global semiconductor market and has led to speculation that Huawei may soon also mass-produce 5nm chips.

Per a report from Business Korea, Zhang further noted that manufacturing 3.5 nm semiconductors necessitates EUV lithography machines, which Huawei is reportedly working on independently. However, overcoming U.S. and Dutch patents to internalize this technology is considered highly challenging.

Previously, as per a report from Chinese media outlet “Phoenix New Media,” Zhang Ping’an also pointed out that the semiconductor industry in China currently cannot directly compete with developed countries in cutting-edge processes, such as 3nm and 5nm. This is an indisputable fact, but it does not mean that China’s semiconductor industry has no prospects for development. Furthermore, Zhang believed that the semiconductor industry in China should be more focused on deepening efforts in relatively mature processes, such as 7nm, to enhance product performance and reliability, meeting the needs of the market and users.

Moreover, some Chinese manufacturers are exploring ways to overcome these restrictions. Notably, Chinese DRAM manufacturer ChangXin Memory Technologies is reportedly preparing to mass-produce 18.5nm DRAM to circumvent US sanctions on DRAM equipment below 18nm.

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• [News] Huawei Executive Acknowledges Production Bottleneck, Addressing that Solving 7nm Issues Would be Good Enough 
• [News] China’s Big Fund Phase Three Commences, Injecting 344 Billion RMB into Semiconductor Industry Growth

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Intel CEO Pat Gelsinger gave a keynote speech at the 2024 COMPUTEX TAIPEI yesterday. According to a report from UDN, Gelsinger addressed that the U.S. must carefully find an appropriate balance in its chip ban against China to avoid pushing China to accelerate the development of its own chips. He stated that Intel’s technology holds a competitive advantage in China and will continue to export appropriate products to China.

Regarding the AI era, Gelsinger mentioned that all devices will eventually become AI devices, and all businesses will become AI businesses. He also introduced Intel’s foundry services as the first production system designed for the AI era. He stated that AI will be ubiquitous, its applications including AI PCs, end devices, enterprise products, and data centers.

At a press conference following the event, Gelsinger was asked about the development of Intel’s foundry services. He noted that everything is on track, with the goal of achieving this through a more flexible and balanced supply chain.

Regarding whether the U.S. chip export ban is prompting China to accelerate its chip development, Gelsinger said that the ban acts like a “magic line.” If the bans are too strict, it could force China to speed up the development of its own chips, so it is indeed crucial to carefully find the appropriate balance.

Per a report from tom’s hardware, Gelsinger agrees on strict restrictions on manufacturing technology, particularly emphasizing limitations on EUV lithography, which he believes will curb Chinese chipmakers’ capabilities to keep American companies competitive in China.

Notably, per Reuters citing sources, the U.S. government has reportedly revoked the licenses of Intel and Qualcomm to supply semiconductor chips used in laptops and handsets to Huawei. Some companies received notices on May 7th, and the revocation of the licenses took immediate effect.

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• [News] Intel CEO Gelsinger Unveils Lunar Lake Processors, Giving Credit to TSMC
• [News] U.S. Imposes Further Sanctions, Revoking Intel and Qualcomm’s License to Supply Chips to Huawei

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