TSMC on Thursday has confirmed that it had stopped processing new orders from Huawei back on May 15th. The news is the first official statement from the company on the matter, since the US Commerce Department’s expansion of rules to require licenses for sales to Huawei of semiconductors which us US technology.
Under the rule change, Taiwan based TSMC is not allowed to sell to Huawei silicon products unless the Chinese vendor receives (an unlikely) license from US regulators. Huawei and TSMC had been given a 3-months grace period in which existing orders were allowed to be processed and shipped. TSMC yesterday has confirmed that the manufacturer does not plan to ship any wafers to Huawei or HiSilicon after September 14th.
It’s been wildly speculated that Huawei had been pre-empting the US ban and making very large orders to TSMC to be able to have a sufficient silicon supply for the rest of the year. However, once this stock runs out and if the political situation hasn’t been resolved by then, it would mean big troubles for the Chinese vendor. Beyond Huawei’s consumer business segment which had grown to be the #2 smartphone vendor in the world, behind Samsung and ahead of Apple, Huawei is an important player in the cellular infrastructure market where they are currently the leading player for telecommunications equipment.
HiSilicon is also a big player in the DTV SoC market, IP camera SoC market, and most recently an entrant in the server CPU market with their in-house Kunpeng 920 chip and custom microarchitecture. Without means to manufacture their designs, it leaves the company in a precarious situation. Other semiconductor foundries are also unlikely to be able to pick up Huawei as a customer as they all use US-made equipment. In theory, even Shanghai based SMIC would be banned from supplying Huawei – in practice we haven’t heard any confirmation on the situation there yet.
As for TSMC, Huawei represented the manufacturer’s biggest customer with a 23% revenue share in 2019. Surprisingly enough, the company states that the Huawei ban is unlikely to have an effect on the company’s revenues, with other customers being able to pick up coveted manufacturing capacity. The company even forecasts 20% year-on-year growth for the July-September period, and is further increasing its capital expenditure for the year to up to $17bn.
Related Reading:
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- Micron Obtains License to Sell DRAM & NAND to Huawei
- Huawei CEO Richard Yu Q&A: “Politicians are Playing Games”
- Report: Arm Suspends Business with Huawei - Future Chip Development In Jeopardy
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