Huawei’s radio silence

Hi all, this is Vlad in Hong Kong. Huawei’s hot new phone raises a lot of questions. But first...Three things you need to know today:• China [View in browser]( [Bloomberg]( Hi all, this is Vlad in Hong Kong. Huawei’s hot new phone raises a lot of questions. But first... Three things you need to know today: • China wants more officials to [stop using iPhones]( • SK Hynix is [looking into]( how Huawei got its chips • Google has new rules for [AI-generated political ads]( Hello, Mate The only people in China not talking about the new phone from Huawei Technologies Co. seem to be Huawei employees. With zero fanfare, the Shenzhen company put its latest device on sale last week, sparking a whirlwind of nationalist sentiment across social media with its revival of self-designed chips and fast wireless performance. Years after US sanctions cut it off from advanced chipmaking, Huawei seemed to be back in business. The groundswell of patriotic fervor got amped up by state-affiliated publications. Editorials in the Global Times and Economic Daily feted the Mate 60 Pro as a return to the big leagues for China’s tech champion. CCTV ran a report about Huawei procuring 10,000 made-in-China components. Huawei let the gadget speak for itself. But that left key questions unanswered — like who made the celebrated chip at the heart of the handset, and how. So I bought the phone, tested its performance and shipped it out to TechInsights in Ottawa where it got [torn apart]( in the name of science. So here are the most important things we now know: The silicon eliciting all this excitement is a 7-nanometer chip made by China’s top chipmaker, Semiconductor Manufacturing International Corp. It’s the most advanced chipmaking SMIC has shown itself capable of, according to TechInsights, and helps the phone achieve [cellular speeds]( on par with 5G devices. Both SMIC and Huawei are subject to US trade sanctions that deprive them of international chipmaking expertise and machinery, and the prospect of either company assembling a respectable 7nm chip mostly with domestic tech seemed dim. Now that they’ve done it, it’s still hard to gauge how much of an achievement this is. Was this Herculean exertion of capital and effort just a show of force, something to flaunt during US Commerce Secretary Gina Raimondo’s visit to China? Her department authored many of the sanctions that Huawei’s been under. The lack of any marketing campaign or event would lend credence to the belief that Huawei might have rushed the phone out the door to match her itinerary. Either way, the Mate 60 Pro’s processor technology now has to prove it can scale up to high volumes and with good enough production yields to make it economically viable. That’s when things get really interesting. Will the Mate 60 eat into Apple Inc.’s iPhone sales in China this holiday season? A handful of analysts have said as much, and it can't hurt that Chinese government agencies are telling staff to ditch their iPhones at work. And might Washington rejigger its sanctions regime if Huawei and SMIC are shown to have advanced beyond the performance threshold DC officials had set? Shanghai-based SMIC has been as silent as Huawei in recent days. The chipmaker’s shares, which surged on the initial news of the Mate 60 Pro, have given up most of their gains after US lawmakers suggested SMIC violated sanctions and said the company [should be investigated](. It would be great to hear from the companies themselves, but as of now, all we have is Huawei’s boilerplate message that this is the most powerful Mate device ever. The past few days have shown, at least in this instance, a product speaking louder than a company or government can. —[Vlad Savov](mailto:vsavov5@bloomberg.net) The big story South Korea is investigating the appearance of malicious code installed on Chinese-made hardware. The discovery was made on [equipment used by the Korean weather agency](. One to watch [Watch the Bloomberg Technology TV interview]( with Ripple co-founder Chris Larsen on crypto regulation. Get fully charged Saudi Arabia’s state-controlled telecom company invested [$2.25 billion in Madrid-based Telefonica](. The deal will test Europe’s [appetite for Middle Eastern wealth](. SMIC’s Huawei chip may have [violated US sanctions](, US lawmakers say. Microsoft and Apple face[new EU investigations](. Roku will cut 10% of its staff and [reduce its office space](. A London VC firm backed by Spotify’s CEO [raised a new fund]( to invest in AI startups. 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