According to four sources with knowledge of the matter at hand, embattled Chinese tech giant Huawei Technologies is expanding its smart car partnership with state-owned Chongqing Changan Automobile Co Ltd to include the design and development of semiconductors for the auto sector.

In the last 6 months both companies have been collaborating informally on designing chips for the said sector. They might soon form a joint venture for chip development, said another source.

Squeezed by U.S. sanction, Huawei was forced out from the smartphone business and has now pivoted to chip designing for electric vehicles. The Chinese company also plans on launching EVs under its own marquee.

The development marks a significant expansion for Huawei’s chip business and comes in the wake of U.S. sanctions which caused it to lose access to the vital underlying chip design software needed for more advanced chips used in smartphones.

Sources preferred the cover of anonymity since they were not authorized to speak to the media.

Changan did not respond to requests for comments.

In a statement Huawei said it defers to automakers in public announcements regarding their tie-ups.