The captive but ambitious chip maker looks to spread its wings...
HiSilicon, China’s leading fabless semiconductor supplier, has emerged as a legitimate player in the global chip market, becoming an increasingly important customer for foundry leader Taiwan Semiconductor Manufacturing Co. (TSMC) while serving as the main chip supplier to its parent company, Chinese telecommunications giant Huawei.
Certainly, HiSilicon’s rise to the top ranks of global chip vendors is tied to captive consumption by Huawei — analysts reckon 90 percent of HiSilicon’s sales go to its parent. Still, market tracker IC Insights reported the Chinese fabless leader registered an impressive 54 percent year-on-year gain in chip sales. First quarter revenues pegged by IC Insights at just under $2.7 billion propelled HiSilicon into its top-ten chip suppliers.
HiSilicon and GPU leader Nvidia (ranked ninth) bumped Infineon and Japan’s Kioxia Corp. from the market tracker’s list of top chip sales leaders.
Among the reasons for HiSilicon’s surge is its low-profile expansion beyond Huawei to supply other customers. As we reported, Shanghai HiSilicon Technology Inc. announced in early January it was offering 4G communications chips on the open market. That gambit is likely reflected in HiSilicon’s emergence during the first quarter of this year.
As it expands, the risks associated with HiSilicon’s foray into the global semiconductor market are mitigated by a steady customer — parent company Huawei — for its Kirin family of AI and 5G modem chips. The high-end 7-nm Kirin SoCs along with comparable devices supplied to Apple accounted for a substantial slice of TSMC’s 45-percent jump in first quarter revenues over the same period in 2019, according to IC Insights.
Indeed, the market tracker reported that Apple and HiSilicon together provided a hefty 37 percent of TSMC’s sales during 2019.
With 5G wireless networks rolling out, albeit more slowly in the midst of a pandemic, the combination of assured demand from its parent company and growing dependence by the world’s largest pure-play foundry bodes well for HiSilicon.
China has launched a series of semiconductor initiatives over the last several decades, including Shanghai Hua Hong, Semiconductor Manufacturing International Corp. and others. Despite huge governments investments, all failed, eventually absorbed by Asian partners seeking a foothold in the huge Chinese chip market.
If HiSilcon continues to expand its hybrid strategy as captive supplier to deep-pocketed Huawei while selling to outside customers, it just might emerge as a force in a transformed global semiconductor market.