Two sources said a Huawei Technologies unit delivers new Chinese-made surveillance camera processors, indicating the company circumvents four years of U.S. export regulations.

One source and a third supply chain source said the company’s HiSilicon chip design unit began shipping to surveillance camera manufacturers this year. Sources informed on the unit said some consumers were Chinese.
Recently, Huawei released smartphones with powerful CPUs that analysts think are domestically built. The moves suggest the Chinese tech behemoth is bypassing Washington’s export limits, which have prevented it from buying U.S. components and technology without permission since 2019.

“These surveillance chips are relatively easy to manufacture compared to smartphone processors,” said a security camera supply chain source. HiSilicon’s return would shake up the market.

The key is that the corporation appears to have circumvented U.S. chip design software regulations. Huawei claimed in March that it had developed design tool breakthroughs for semiconductors over 14 nanometres, two to three generations behind leading-edge technology but an advance for the business.

Besides Huawei, HiSilicon has supplied processors to Dahua Technology (002236. SZ) and Hikvision (002415. SZ). Southwest Securities estimated its global surveillance camera chip market share in 2018 at 60% before U.S. export controls.

Frost & Sullivan reported that HiSilicon’s worldwide market share dropped to 3.9% by 2021.

One source claimed HiSilicon had sold some low-end surveillance chips since 2019, but its focus was on high-end and recovering market share from Novatek Microelectronics Corp (3034. TW).

Due to sensitivity, all three sources declined to be named. Huawei wouldn’t comment.

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In late August, Huawei released the Mate 60 Pro, a smartphone with a 5G chip that users said was fast. Chinese state media and the public celebrated Huawei’s smartphone business’s recovery after U.S. sanctions damaged it.

TechInsights determined that the Mate 60 Pro was powered by a new Kirin 9000S chip, possibly built by China’s premier chip foundry, SMIC (0981. HK).

Huawei hasn’t discussed the phone’s 5G capability or chip production. The Kirin series was conceived by HiSilicon and manufactured by TSMC (2330. TW) before the U.S. sanctions Huawei.

U.S. lawmakers called for “more effective export controls” on Huawei and China’s leading chip foundry, SMIC (0981. HK) after the launch.

On Tuesday, U.S. Commerce Secretary Gina Raimondo said Huawei cannot mass-produce cellphones with modern CPUs.

U.S. sanctions have prevented HiSilicon from using Cadence Design Systems Inc (CDNS.O), Synopsys Inc (SNPS.O), and Siemens AG’s Mentor Graphics EDA software. The three businesses dominate chip design, which creates chip blueprints before mass production.

TechInsights analyst Dan Hutcheson’s research of the Mate 60 Pro and its radio frequency power chip revealed that Huawei possessed advanced EDA tools “they are not supposed to have.”

He remarked, “We don’t know if they got them illegally, or more likely, the Chinese developed their own EDA tools.”