Soon: US legislation against Huawei has spanned from the company’s blockade outside the US to the outage of new developments. A recently enacted law will require any company that uses American tools or designs to apply for a license to sell to Huawei, which appears to extend to multinational TSMC. The Taiwanese manufacturer previously built most of the processors and cellular equipment used in Huawei devices.
TSMC President Mark Liu announced at an investor conference that TSMC is complying with the new US legislation, and did not receive any new requests from Huawei after May 15. Your final shipment to Huawei will have been completed by September 14. He did not say whether TSMC will apply for a license, but indicated that they have already secured clients for Huawei’s previously reserved portion of production capacity.
TSMC does not expect the new legislature to inflict much harm on them. Development in 7nm, 5nm and 3nm technologies has given rise to a multitude of eager new customers. AMD and Nvidia will use TSMC for large batches of future products. Apple is also reportedly interested in partnering with TSMC to manufacture the next ARM products for Mac. And while mobile sales declined, the need for expensive 5G equipment is also expected to increase sales in that sector.
Huawei’s outlook is not so optimistic. TSMC manufactured multi-billion dollar equipment for Huawei each year, including the Kirin processors found in all of its smartphones. Huawei has very few places to turn to for processor manufacturing, as they are equally disconnected from Intel, Samsung, and GlobalFoundries. Unless one of these companies can obtain a license, Huawei will depend on smaller Chinese smelters that are likely, in the near future, to have difficulty catching up with the advances made by larger competitors.
In May, it was revealed that Huawei had spent $ 23 billion on reserves of “essential components”, which included a large number of processors and other types of chips. Huawei likely has enough equipment to keep sales going for a year or two. If they don’t find a solution by then, they will start teetering on the edge of profitability.
Image credit: Karlis Dambrans, Ascannio.
