Huawei Technologies’ unveiling of a chip architectural workaround to bypass US sanctions marks a major step towards China’s semiconductor self-sufficiency, giving Beijing powerful new leverage in its tech tug of war with Washington, analysts say.
The Chinese tech giant captured global attention on Monday by introducing the new Tau (τ) Scaling Law, which it said lay the groundwork for Huawei to achieve transistor density equivalent to a 1.4-nanometre process in high-end chips by 2031. If proven, the advancement would significantly narrow the gap with global semiconductor leaders at the cutting edge of chip development.
With the new law, Huawei is targeting significant performance improvements in both smartphone chips and artificial intelligence computing systems.
“The US will have less leverage over export control as China becomes more self-sufficient,” said Gary Ng, senior economist at Natixis Corporate and Investment Bank, although he cautioned that the law still needed to be “tested in practice”.
US-led sanctions currently block China’s semiconductor industry from accessing the most advanced chipmaking technologies, notably extreme ultraviolet (EUV) lithography machines needed for 3nm nodes and below.
Huawei’s new trajectory promises to bypass this critical bottleneck. He Tingbo, chairwoman of the Huawei Scientist Committee and president of its semiconductor business department, said cutting-edge EUV tools would no longer be necessary to achieve these advanced nodes.
Chinese state media hailed the breakthrough. Communist Party mouthpiece People’s Daily likened the struggle against US sanctions to “the most tragic and brave Long March in the history of science and technology” – a historical nod to the military retreat that preserved the party’s core forces and resources.
“Instead of getting stuck in a rut, why not try a different approach?” the paper wrote on Monday.
The implications extended far beyond a single technical milestone, signalling China’s broader adaptation to Western technology restrictions, according to James Lambert, head of Asia consulting at Oxford Economics.
“Developments like this may be viewed as evidence that Chinese firms are having success in investing heavily in alternative domestic AI and semiconductor ecosystems, rather than remaining dependent on Western technology pathways,” Lambert said.
Beijing has poured massive capital into its chip self-sufficiency drive, encouraging firms to work around Western bottlenecks. Recently, it has also restricted foreign access to its market, with the government yet to approve domestic sales of Nvidia’s H200 AI chips in the country.
Wall Street research firm Bernstein described the announcement as “another DeepSeek moment”, predicting it would inject confidence into China’s semiconductor industry if executed successfully.
“Just like the DeepSeek innovation on algorithms encouraged China to invest in AI and build a whole AI-stack locally, Huawei’s Tau Scaling Law now will give the industry a lot more confidence to invest in China semis and build a whole semis-stack locally,” Bernstein analyst Lin Qingyuan wrote in a note on Monday.
Analysts expected the impact from Huawei’s breakthrough to reverberate globally.
“Nvidia is likely the most concerned by this development,” said He Hui, director of semiconductor research at research firm Omdia. “Having already lost half of its market share in China, Nvidia now faces a reality where domestic chip performance has nearly closed the gap with the H200.”
The breakthrough comes at a critical juncture in the US-China AI race, where both countries face an insatiable appetite for computing power. Liao Heng, chief scientist at Huawei’s semiconductor department, said the company’s new path directly addressed this supply crunch.
“By 2035, our single chip module performance can be expected to increase by 100-fold, and system level performance can be expected to increase by 1,000 times,” Liao said.
“This path has effectively tackled the question of the challenge around computing power availability because that is an anxiety existing in China [and] around the world as AI continues to evolve.” -- SOUTH CHINA MORNING POST
