Shanghai IC R&D Centre, a chip research company backed by the Shanghai Municipal government will run the plant, the Financial Times reported on Sunday, citing people familiar with the matter.
The project is reportedly focusing mainly on chips needed for the infrastructure business, not the smartpone business.
The plan is to start with low-end 45nm chips and acquiring expertise for developing 20nm chips in two years so that its 5G telecoms equipment business can continue even in the face of US restrictions, said the report.
While Huawei and IC R&D Centre did not confirm the plans, Chinese newspaper Caixin reported on the project last month.
Huawei late last month said that it generated a revenue of 671.3 billion yuan ($98.57 billion) in the first three quarters of this year, an increase of 9.9 per cent over the same period last year.
The results showed that restrictions imposed by the US slowed down growth of the Chinese technology giant as duriing the same period last year, the company reported revenue growth of 24.4 per cent.
Huawei said that amid Covid-19, its global supply chain faced intense pressure and its production and operations face significant challenges.
“The company continues to do its best to find solutions, survive and forge forward, and fulfill its obligations to customers and suppliers,” Huawei said in a statement.
“Moving forward, Huawei will leverage its strengths in ICT technologies such as AI, cloud, 5G, and computing to provide scenario-based solutions, develop industry applications, and unleash the value of 5G networks along with its partners,” it added.
The US government this year announced new export controls aimed at limiting Huawei’s access to semiconductor technology.