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ZTE has designs on chips with TSMC

Resurgent ZTE, which seems to be faring better than Huawei growth-wise in the wake of US sanctions, is building up its own chip-design capabilities to develop basestation processors.

Taiwan Semiconductor Manufacturing Company (TSMC), the dominant maker of the world's most advanced chips, is helping out the Chinese supplier with chip manufacturing and packaging technology.

Nikkei Asia reported on the collaboration between ZTE and TSMC, citing sources apparently familiar with the matter. According to them, ZTE is using TSMC's 7-nanometer (nm) tech to build processors for its 5G basestations.

The report goes on to say that ZTE is aiming for double-digit growth in domestic server shipments this year and is especially keen on expanding market share in basestation servers.

ZTE seems in strong recovery mode after nearly going out of business back in 2018.
 (Source: Jordi Boixareu/Alamy Live News)
ZTE seems in strong recovery mode after nearly going out of business back in 2018.
(Source: Jordi Boixareu/Alamy Live News)

"ZTE has turned quite aggressive in pursuing its chip capability in the past few years. Although the volume is still small, it is showing impressive progress," said one unnamed source.

TSMC, as well as ZTE, seems to be on a bit of a roll. On the back of another robust set of quarterly financials Q4 FY21 and a strong balance sheet, the Taiwanese firm announced a massive capex budget hike to increase manufacturing capacity in "advanced process technologies," including 2nm, 3nm, 5nm and 7nm.

Huawei squeeze

Unlike ZTE, Huawei is still on the US Entity List. This cuts Huawei off from the supply of semiconductors from US and non-US suppliers, including TSMC, which rely on US intellectual property.

The restriction is beginning to take its toll. Huawei's revenue dropped by a massive 29% last year compared with 2020 and was the first decline in sales since 2002. The Chinese supplier is intent, however, on building up semiconductor self-reliance.


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ZTE, on the other hand, seems in strong recovery mode after nearly going out of business back in 2018. Revenues grew at a double-digit percentage rate last year, rising inside and outside China and across all three business units – carrier (networks), enterprise (business) and consumer (gadgets).

In China, as reported by Nikkei Asia, ZTE said it gained market share in China last year for servers, core networks and storage solutions – three areas in which Huawei plays big.

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— Ken Wieland, contributing editor, special to Light Reading

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