China cooks covert chips, recruits global geeks to dodge US restrictions

China is looking to hire engineers from other nations to bolster local chip production in the face of crippling US sanctions, with Huawei – one of the country's largest tech giants – said to be creating a network of covert semiconductor plants across the country.

As Washington tries to curtail China's access to advanced technology, Beijing continues to seek ways to advance its semiconductor ambitions, including discreetly reviving a past initiative to recruit top foreign-trained scientists to import much-needed expertise.

The new initiative, called Qiming, is overseen by the Ministry of Industry and Information Technology, according to Reuters, which cites anonymous sources as well as national and local policy documents.

Qiming was set up to run in parallel with other recruitment initiatives from local and provincial authorities plus a government-backed hiring drive by Chinese chip companies themselves, which favor applicants trained at elite foreign institutions, the sources indicated.

In related news, Huawei is building out a covert network of semiconductor facilities across China to tackle the limitations of US sanctions that have choked off its supply of chips.

According to the Semiconductor Industry Association (SIA), the trade body for US chipmakers, Huawei has taken possession at least two existing factories and is building a minimum of three others. SIA claims it is doing this under the names of other companies to conceal its involvement, as reported by Bloomberg.

Doing so may allow Huawei to circumvent restrictions and indirectly purchase chipmaking equipment and other supplies that would otherwise be off-limits to the company. As a reminder, earlier this year, Washington was pushing for an all-out block on any and all US technology export licenses to Huawei.

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China is not alone in its scramble to secure semiconductor prowess. Chip manufacturers around the globe have taken to buying up secondhand semi manufacturing kit to keep pace with their expansion plans, Nikkei Asia reports.

This used gear trend kicked off in the wake of the pandemic, when a shortage of chips became apparent as economies emerged from lockdown. Still, years later, these challenges persist despite the current downturn in the semiconductor industry.

The market for used semiconductor equipment has historically made up about 10 percent of all those sold, although it could be much larger. The problem is, it is difficult to track, and the true value could be close to $50 billion, said the CEO of Moov Technologies, an online platform for buying and selling secondhand chip gear.

China's technology companies can take heart over one US decision. Washington has agreed to extend a one-year exemption that allowed South Korean and Taiwanese semiconductor companies to continue exports of advanced chips and equipment to China.

The exemptions, introduced last year, mean that Samsung, SK hynix, and TSMC can continue operations such as production of integrated circuits in China, despite the US Department of Commerce's restrictions on dealings with Chinese chip companies. The extension is understood to be aimed at preventing further disruption to the global semiconductor supply chain. ®