Huawei suffers as TSMC halts future orders
Updated: Jun 8, 2020
Huawei is TSMC's 2nd largest customer, however, new export control regulations have meant they had no choice but to cut off future supplies.
TSMC, otherwise known as the Taiwan Semiconductor Manufacturing Company, is Taiwan's largest company by sales volume and size. Recently, they have been affected by the new US export rule that states any non-US chip manufacturers using American equipment in their manufacturing process will have to apply for a license, should they want to ship their chips to Huawei.
Huawei is their TSMC's largest customer, so it will equally affect both companies negatively. Huawei has been the one drawing criticism, so only has itself to blame. US government officials had reason to believe Huawei's mobile technology has the ability to peek in on other country's government activity. Reports are widespread that the Chinese government has been getting cosy with Huawei, and their products pose an inner security risks to other developed nations who import these devices.
TSMC has been in the crossfire of Washington & Beijing tensions, so it is clear why they may have pulled out of such a trade agreement. What makes things even worse for them is that the tightened US goods controls were imposed the same day the Taiwanese chip manufacturing company announced plans to build a $12 billion plant in Arizona - The US Secretary of State Mike Pompeo was quick to shut down these plans, calling them a plan to "bolster the USA's national security", especially when it is at a time where China is reportedly trying to take control of key industries and develop highly advanced technology.
Any current shipments that are planned to happen before the 14th of September this year will avoid the new rule changes, so as long as they went into production on or before the 15th May this year. If any manufacturer breaks these laws and attempts to override the need for a license, they have been warned that US regulators will impose heavy penalties, potentially crippling profits for foreign chip manufacturers including TSMC and SMIC
(Semiconductor Manufacturing International Corporation), the latter of the two being headquartered in Hong Kong, China.
Huawei has long been considering to switch its majority chip supply to Samsung, as well as SMIC, in a bold move to switch to the manufacturing of domestically built chips (That would mean no elements of the chip design could be inspired or sourced from the USA).
We know the USA has always taken a sense of unease to Chinese manufacturers, and now it seems they are taking a nationalistic stance on their chip manufacturing industries, but it seems they've done it in such a way that it might potentially harm other industries that the USA can't specialise as well in - This would not be in the best interests of the US economy for sure. Huawei's CEO claims that the actions of the US customs are "merely an excuse", directly targeted to expose dangers China poses to the rest of world, should these dangers even be real or not, the USA doesn't really seem to care, they just want to be one above the communist nation.
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