US Department of Commerce’s export rule change prohibits foundries like TSMC from shipping chips Huawei which were built using American based technology. Next week, TSMC will not be allowed to ship state-of-the-art 5nm chips to the Chinese manufacturer, which the company expected to use to power the Mate 40 line; The latter will be the most technologically advanced phone of the year. The chips are also used by Huawei at its 5G base stations sold to its telecom customers for its 5G network.
If China threatened Apple, how fast would the US return from Huawei?
TSMC is running in line 24 hours a day, helping Huawei manufacture a supply of chips before it is not allowed to buy any more. What will happen to Huawei is uncertain once these 5nm chips go out. According to NotebookCache, last week’s IFA trade show in Berlin was the first to open its doors to actual live attendees and companies since the onset of the coronovirus epidemic. but Huawei failed to unveil its 5nm chip at the show, which could be bad for the company’s future.
TSMC will have to stop delivering chips to Huawei starting next week
Huwaway, which plays a large role in IFA in general, had a much smaller presence than usual. The company, and its Honor second main brand, introduced only wear and notebooks at the Expo, indicating that the future for Huawei’s smartphones is in the air. Those members of the supply chain familiar with the situation said that Huawei had determined last year that its embargo from the US supply chain could trigger US attacks on the company; As a result, Huawei booked capacity from TSMC first as a precaution. This was a sensible move as the company is manufacturing chip inventory, designed by Huawei’s HiSilicon unit.
While Huawei fans can be blamed for this problem at the feet of TSMC, the company has been accommodated at Huawei. The latter was the second largest customer of the foundry last year, representing 15% to 18% of 2019 revenue. Apple is the largest customer of TSMC.
US Export Rule Change also blocks Meditech from Huawei with a 5G chip without permission from the US, and Qualcomm’s Snapdragon chips also cannot be obtained without permission from Huawei. TSMC, after all, produces high-end chips from both designers. China’s top foundry, SMIC, is a pair of process nodes behind TSMC and is not a viable candidate for Huawei to use as a replacement at this point.
Huawei will reportedly have enough chips for three to six months of use and told its fan base that the Mate 40 series will definitely affect the market powered by the 5nm Kirin chipset. But what will happen to Huawei in the future? With the US government blaming China for the coronovirus outbreak, the current administration does not appear to be in the mood to hand over favors to any company based in the country. Yet, you never know where salvation can come from. The company had a tough time until fellow Chinese manufacturer ZTE (also considered a threat to US national security) was banned from its US supply chain in 2018 President Trump spread a tweet saying he was working on a business with President Xi to “get back to business (ZTE), fast. Many jobs were lost in China.” Eventually, the Commerce Department reached an agreement with ZTE. But that was then and this is now.
If Huawei is unable to find a way around the chip ban, China could retaliate against the US by making things difficult for US companies whose products are assembled in the country, including Apple. If China stopped Apple from exporting its devices from China, how fast would the US withdraw from Huawei?