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Huawei’s market exit crisis blocks supply and demand for semiconductors
National companies, inevitable short-term drop in performance
However, it can be a long-term opportunity.
Interest in the guidance of China’s hardline response
Photo = REUTERS
The general US sanctions on semiconductors against Huawei, the largest maker of telecommunications equipment and smartphones in China, will begin on the 15th (local time).
It is expected to be a huge turning point for the global semiconductor industry as it is a super strong sanction that locks in supply and demand for semiconductors and places Huawei at a crossroads of existence.
According to the semiconductor industry, the US Department of Commerce has prohibited all semiconductors produced with US equipment, software (SW) and designs from being supplied to Huawei without prior approval.
The industry believes that the possibility of US approval for the sale of semiconductors is unlikely, as the US anti-Huawei frontline is so obvious given the Trump administration’s keynote on China. In fact, many opinions interpret it as blocking the export route to Huawei.
Huawei is on fire immediately. This is because there is a disruption in the supply and demand for semiconductor components needed to make various products such as smartphones, mobile communication base stations, servers, computers, and televisions in the future. TF International Securities predicted: “In the worst case, Huawei will be withdrawn from the smartphone market.”
Recently, Huawei has rapidly increased the volume of orders through partners to accumulate as much inventory as possible before the sanctions take effect. It is interpreted as a plan to hold out with the parts in storage as long as possible until the sanctions from the US government are lifted.
Nikkei Asian Review said: “Huawei is actively storing fifth-generation (5G) communication smartphone chips, Wi-Fi chips and image driving chips, etc., until the US sanctions.” While we pay, we are launching a dedicated freighter and securing the amount of application processor (AP) for TSMC smartphones etc. “
Huawei has not confirmed the size of the semiconductor components it has stored. According to foreign media, since the beginning of next year, which is roughly three to a half years later, there are observations that Huawei’s spare parts will be shipped, and an analysis that it has stockpiled up to two years of core semiconductor parts.
However, regardless of stocks, Huawei, which leads the world market for communications equipment and smartphones, seems inevitable. An industry insider said: “Huawei’s inability to supply and demand high-tech semiconductors in the future could lead to deterioration in the market competitiveness of Huawei’s products.”
Market research firm Strategy Analytics (SA) predicted that Huawei’s global smartphone market share will plummet to 4.3% next year. Huawei’s market share, which is expected to be 15.1% this year, has fallen more than 10 percentage points in one year.
A view of the Huawei store taking part in the world’s largest consumer electronics IT exhibition ‘IFA 2020’ held in Germany on the 3rd / Photo = EPA
Due to US sanctions, not only Taiwanese and Japanese semiconductor component suppliers such as TSMC, MediaTek and Sony, which had Huawei as their customers, as well as domestic companies such as Samsung Electronics and SK Hynix, which exported DRAM were fired. and NAND flash. .
Samsung Electronics and SK Hynix recently applied for approval from the US Department of Commerce, but the chance for approval is slim. Huawei’s share of the sales of the two companies is known to be 3% and 11%, respectively.
The semiconductor industry predicts that if the export ban continues for one year, there will be a sales disruption of approximately 10 trillion won per year. Considering that Korea’s total semiconductor exports last year were about 112 trillion ($ 93 billion), the proportion is not large, but a short-term export shock is expected to be inevitable.
However, in the long term, there are also observations that it will not be difficult to find alternative customers, as memory semiconductors belong to standard general-purpose products rather than custom products. If Huawei’s vacancy is filled by other Chinese companies such as Oppo, Vivo and Xiaomi, there is also an expectation that the domestic companies supplying them will benefit again.
With Huawei’s shrinking position, Samsung Electronics is expected to benefit from reflections in other fields besides semiconductors. Song Myung-seop, a researcher at Hi Investment & Securities, said: “Huawei accounts for more than 10% of SK Hynix’s sales, so a hit is inevitable.” did.
Huawei and the Chinese government await relief from the US government sanctions against Huawei based on the results of the US presidential elections in November.
However, the observation that high intensity sanctions will be prolonged has not abated. If the Democratic Party candidate, Joe Biden, is elected, it is not easy to appease China. The Wall Street Journal (WSJ) recently said: “Biden’s opinion of the public has changed. No matter who is elected, America’s public policy will be stronger.”
This is because the United States initiated high-intensity sanctions against Huawei due to a sense of crisis that Huawei cannot deliver the 5G infrastructure, which is the core infrastructure of the industry of the future, to China, which is led by Huawei.
First, the Chinese government is trying to overcome the crisis through the “double cycle”, which means a self-sufficient economy focused on domestic demand. Chinese President Xi Jinping expressed his willingness to break not only the sanctions against Huawei, but also the general economic pressure from the United States towards the domestic market.
Interest is also centered on whether China will change its attitude towards a hard line. Chinese Foreign Ministry spokesman Jiorizen said in a regular briefing on the 11th (local time), “China opposes the United States abusing its national capabilities as an excuse for national security and represses the foreign companies for no reason. ” In addition, we will take the necessary measures to protect the rights and rights of Chinese companies. “
Seongsu Bae, Reporter Hankyung.com [email protected]
