HiSilicon, the integrated circuit (IC) design arm of Huawei Technologies Co, has dropped out of the rankings of the world's top 25 semiconductor vendors amid stifling US trade sanctions that have also reduced China's overall share of the global chip market, according to research firm Gartner.
That exit marked "the most significant shift" among the global semiconductor vendor rankings last year, according to a Gartner report released on Thursday, as Huawei continues to fight for survival after the company and scores of its affiliates – including HiSilicon – were added to the US government's trade blacklist in May 2019.
"HiSilicon's revenue declined 81 per cent, from US$8.2 billion in 2020 to US$1.5 billion in 2021," said Andrew Norwood, research vice-president at Gartner in the report. "This was a direct result of the US sanctions against the company and its parent Huawei."
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It also made an impact on China's share of the global semiconductor market, which declined to 6.5 per cent last year from 6.7 per cent in 2020, according to Norwood.
A close-up view of a HiSilicon-designed codec processor. Photo: Shutterstock alt=A close-up view of a HiSilicon-designed codec processor. Photo: Shutterstock>
The latest chip vendor rankings come weeks after privately-held Huawei reported its worst annual sales performance on record. The Shenzhen-based company posted total 2021 revenue of 636.8 billion yuan (US$100 billion), down 29 per cent from a year earlier, as the company continued to struggle with tighter restrictions imposed by Washington in 2020 – covering access to advanced chips developed or produced using US technology, from anywhere.
With no end in sight to US restrictions amid simmering tensions between Beijing and Washington, Huawei has much work ahead before it can revitalise HiSilicon's business and status in the semiconductor industry.
HiSilicon, which is responsible for the Kirin, Gigahome, Kunpeng, Balong and Ascend chips used by Huawei, outsources production of its designs to contract chip makers like Taiwan Semiconductor Manufacturing Co. But under the tightened US sanctions, HiSilicon can no longer do business with TSMC and many other major chip foundries because they all rely to some extent on core US technologies to make wafers.
"Design companies and foundries are extremely dependent on each other, especially with more high-end products involved," said Wang Min, an expert in chip packaging technology. "High-end [chip] products require design personnel to work closely with foundries equipped with advanced processes."
China's fabless semiconductor design market reached US$40.9 billion in 2021, making up 26.5 per cent of the world's total, according to a report by Shanghai-based semiconductor research company ICwise.
Although Huawei has not announced any major lay-offs at HiSilicon, its employees are said to be highly sought after by other mainland IC design firms. A number of employees have already jumped ship to work at Zeku, the Shanghai-based chip design unit of smartphone giant Oppo, according to a source familiar with the matter.
Huawei and Oppo did not immediately respond to a request for comment on Friday.
While HiSilicon's fall from the top echelon of chip vendors showed the impact of US sanctions on China, worldwide semiconductor revenue last year grew to US$595 billion, up 26.3 per cent from 2020, according to Gartner.
"The events behind the current chip shortage continue to impact original equipment manufacturers around the world, but the 5G smartphone ramp up and a combination of strong demand and logistics/raw material price increases drove semiconductor average selling prices higher, contributing to significant revenue growth in 2021," Gartner's Norwood said.
Samsung Electronics regained the top spot in the semiconductor vendor rankings from Intel for the first time since 2018, the Gartner report said. Samsung's 2021 chip revenue totalled US$73.2 billion for a 12.3 per cent global market share, while Intel posted sales of US$72.5 billion for a 12.2 per cent share.
South Korea, meanwhile, recorded the largest increase in global market share last year, as strong growth in the memory market propelled the country to an overall share of 19.3 per cent of the global semiconductor market, according to Gartner.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.
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