Huawei Technologies Co Ltd is trying to shift production of chips designed in-house away from Taiwan Semiconductor Manufacturing Co Ltd (TSMC) and towards Shanghai-based Semiconductor Manufacturing International Corp (SMIC).

The move comes as Washington readies new rules which would require foreign companies using U.S. chipmaking equipment to obtain a license before supplying chips to Huawei.

It is not clear how much more production is being outsourced to SMIC. Huawei could also have the option to choose Samsung or other Taiwanese and mainland Chinese firms as alternative sources for chips.

The U.S. government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy, and has barred U.S. firms from selling to the Chinese firm without a licence. Huawei has repeatedly denied its products pose a security threat.

A Huawei spokesman called the shift “common industry practice” in a statement to Reuters. “Huawei considers carefully issues such as capacity, technology and delivery when choosing semiconductor fabrication plants,” it said.

Both TSMC and SMIC declined to comment.

While SMIC is seen as the strongest mainland China alternative to TSMC, it remains well behind TSMC in its technological expertise. While TSMC is currently perfecting its 5 nanometer process node technology, SMIC just recently introduced 14nm technology in late 2019. This means that the high-end, low-power
HiSilicon Kirin processors, used exclusively in Huawei mobile phones, can only be made by TSMC at the moment. But other chips produced by HiSilicon could be sent to SMIC.