Huawei's ‘Spare Tyre 2.0’ and the Limits of US Sanctions

The year 2025 marks the completion of Beijing’s decade long ‘Made in China 2025’ strategic blueprint to transform the country into a global manufacturing powerhouse. The plan explicitly promotes military–civil fusion, and at the core of this fusion lie semiconductors – indispensable components for AI, drone and missile systems.

Led by Huawei Technologies, China is seeking to internalize semiconductor production. If these efforts succeed, China will gain an important military advantage in East Asia, potentially triggering a global rebalancing of military power.

While it may be unrealistic to obstruct China’s national strategy, it may nevertheless be possible to delay its progression by expanding mini-lateral export control frameworks among key technology-supplying nations.

Huawei’s AI Chip Developments and Its Challenge to NVIDIA

On 18 September 2025, Huawei Technologies, a major Chinese telecommunications company, announced at the technology event ‘Huawei Connect 2025’ in Shanghai that it plans to release four new models to succeed its current AI chip, the Ascend 910 series, over the next three years. The company has traditionally kept its strategies and capabilities secret; thus, this announcement is unusual and clearly signals its intent to challenge the dominance of the American semiconductor company NVIDIA.

Huawei’s AI chip research and development is being advanced through several measures, including collaboration with SMIC, China’s main semiconductor manufacturer, support from the Chinese government and efforts to reduce dependence on foreign technologies. These combined efforts did not start only recently; they are based on the company’s long-term strategic redundancy, known internally since the early 2000s as the ‘Spare Tyre’ strategy, which aims to secure its long-term survival.

Huawei's ‘Spare Tyre’ The Strategy of Redundancy

The concept of Huawei's ‘Spare Tyre’ – the strategy of redundancy for survival amid geopolitical risks – reportedly emerged within the company in the early 2000s This was triggered by the failure, in 2003, of the company's attempt to sell itself to the US telecommunications firm Motorola for the purpose of securing stable access to the American market amid anticipated future tensions between China and the US.

Since then, Huawei abandoned the path of coexistence and mutual prosperity with the US, and, in accordance with the spirit of self-reliance and independence, quietly began to advance domestic manufacturing of key components of its flagship smartphone and to diversify its procurement networks.

In 2004, Huawei began designing its own semiconductors (hardware) through the establishment of its wholly owned subsidiary HiSilicon, and in 2012, Huawei began designing its own OS (operating system). The ‘Kirin Chipsets’ and ‘Harmony OS’, developed by these efforts, have come to be incorporated into Huawei's new smartphone series such as the ‘Mate’ and ‘Pura’, and now function reliably as the company's autonomous technological capabilities.

The earliest confirmed record of Huawei CEO Ren Zhengfei publicly referring to the ‘Spare Tyre’ is the minutes of a roundtable with Chinese media in May 2019. In the roundtable, Ren Zhengfei stated, ‘Since the letter which Hisilicon CEO He Tingbo sent to all employees clearly explains the matter, I will refrain from saying too much,’ but remarked that “the higher-end the product, the more fully ‘Spare Tyres’ are in place,” and that "budgets are allocated with a focus on ‘Spare Tyre’.”

The letter from Hisilicon CEO He Tingbo is an internal company notice issued in response to the addition of 69 entities, including Huawei and Hisilicon, to the US Bureau of Industry and Security (BIS) Entity List in May 2019.

In this notice, He Tingbo described ‘Spare Tyre’ as ‘Huawei Group's ultimate hypothesis for survival, which had long been kept in the vault. However, a single night turned all of them into “Main” due to the mad decision by a superpower nation.’ He Tingbo repeatedly stressed the necessity for Huawei Group to maintain open innovation while building ‘autonomous technological capabilities’, to continue serving customers worldwide without yielding to pressure from Western countries.

Subsequently, by October 2025, among the entities added to the Entity List, approximately 160 entities – including those whose affiliation was explicitly identified by BIS – by this Authors account, came to be regarded as Huawei-related organizations located both inside and outside China.

Against this backdrop, it was reported that Huawei CEO Ren Zhengfei once again referred to ‘Spare Tyres’ in a public facing statement during a roundtable held with Chinese private-sector companies in February 2025. At the roundtable, he was reported to have declared that Huawei would jointly launch ‘Spare Tyre 2.0’ with 2,000 domestic firms, rebuild the ecosystem in critical sectors such as semiconductors, and aim to achieve a 70% self-sufficiency rate across the entire supply chain by 2028.

This reflects the transformation of Huawei's ‘Spare Tyre’ – over years of confrontation with US – from a declaration of determination in May 2019 to a tangible structure by February 2025, what can only be described as a ‘Main Tyre’.

US Entity list: The Boundaries of Sanctions

The approximately 160 Huawei-related entities listed on the US Entity List include not only Huawei's Chinese headquarter and overseas subsidiaries, but also front companies said to support its procurement network, as well as a firm reportedly spun off from specific functional division-spanning a wide range of international locations and operational roles. This web of entities constitutes a part of ‘Spare Tyre’ that Huawei constructed to counter US sanctions. In essence, it is a survival strategy whereby the company ensures business continuity as a group by preparing multiple organizations and channels, so that if one entity is sanctioned, another can take over its function.

Such a web is expected to further expand and deepen in the future, enhancing the ecosystem's distributed resilience with Huawei at its core.

One month before Huawei Group was first listed on the US Entity List in May 2019, its subsidiary investment company, Hubble Technology investment was established – apparently in anticipation of US actions. Since then, it has invested in more than 60 Chinese semiconductor-related companies. Furthermore, ‘Spare Tyre 2.0’ implies an affiliated network of 2,000 companies within China, indicating that the US is already approaching the limits of effectively grasping Huawei Group's web and enforcing sanctions such as those of the Entity List.

Against this backdrop, the US and other Western countries should expedite the establishment of mini-lateral export control frameworks among a small group of like-minded technology-supplying nations. The first step in this direction was the trilateral agreement reached in January 2023 by Japan, the US and the Netherlands to impose export controls on semiconductor manufacturing equipment destined for China. Going forward, it is necessary to expand and deepen such mini-lateral cooperation, for example by similarly restricting the export of advanced materials and chemicals that meet 99.999999999% purity standard (impurities below (0.1 × 10-9)%) and are indispensable to the production processes of advanced semiconductors.

However, these efforts must avoid imposing excessive economic costs on the industrial competitiveness of technology-supplying countries. It is therefore imperative to pre-emptively identify materials that, while currently in the stage of research and development, may possess high strategic value in the future – such as semiconductors intended for use in quantum computing.

Such materials can serve as a cost-effective option from the perspective of medium- to long-term strategic deterrence, maximizing their impact against China while minimizing side effects on technology-supplying countries.

As Huawei continues to reinforce its strategic redundancy not as mere ‘Spare Tyre’ but increasingly as ‘Main Tyre’, rapidly evolving realities are compelling Western countries to respond with decisive measures. What is now urgently required of Western countries is to strengthen a diverse range of comprehensive and cooperative strategic frameworks – rooted in mini-lateral agreements – with the flexibility and agility needed to adapt to such realities.

ABOUT THE AUTHOR

The author is a Visiting Fellow on Indo-Pacific studies with RUSI’s International Security team.

© RUSI, 2025.

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