China’s got chips, too

As the US-China chip war continues to run hot, a new smartphone has entered the chat. 

Driving the news: A Bloomberg report revealed that the Mate 60 Pro, a new phone from Chinese multinational Huawei, is powered by an advanced chip made by SMIC (China’s top chip maker), a sign that the country's chip development has taken a big step forward. 

  • Investors believe the phone’s performance represents a breakthrough in China’s chip industry, with SMIC adding over US$5 billion to its market cap since last week.

  • China also announced on Tuesday that it is launching a state-backed fund for its semiconductor sector with the goal of raising US$40 billion

Why it matters: Huawei’s phone represents the rapid progress that China’s chip industry has managed to make in the face of sweeping US sanctions—a sign that it’s catching up to the West’s ability to build technology that has become a central part of modern economies.

Yes, but: The high-end chip powering the Huawei phone looks promising, but SMIC’s ability to scale up the chip production at a reasonable cost is still a big question mark. 

What’s next: Some experts believe that the development will only escalate the chip war between the world’s two largest economies, with the US likely to double down with harsher sanctions in an upcoming competition bill.—LA