The trade restrictions imposed by the United States on Huawei were already severe, but they just got worse. TSMC, the world’s largest supplier of semiconductors, is no longer accepting manufacturing orders from the Chinese company. The decision is related to the new export controls announced by the American government last week. Also Read - Huawei Y8p with Kirin 710F SoC, 4,000mAh battery, triple rear cameras launched
Huawei is TSMC’s second-largest customer, after Apple. Now, with this new sanction, Huawei is once again affected. Last week, the Trump administration extended restrictions prohibiting American companies from doing business with Huawei and ZTE until May 2021. Shortly thereafter, the United States Department of Commerce announced a new set of rules that prevent foreign semiconductor manufacturers, who also use American technology, from supplying chips to Huawei. Also Read - Huawei Y9s with GMS and 16MP pop-up selfie camera now available in India: Check price, full specifications
Chipsets that are already ordered or in production may be sent to the Chinese company—provided that the shipments are completed by September 14, 2020. Huawei allocates these semiconductors to its mobile devices and network equipment. Also Read - The United States has announced a new rule to prevent Huawei from producing its Kirin chipsets
The company does not hide the fact that the impact of the new restriction on its operations will be tough. “This decision was arbitrary and pernicious, and threatens to undermine the entire industry on a global scale. The new rule will impact the expansion, maintenance, and ongoing network operations worth hundreds of billions of dollars that we have made possible in more than 170 countries,” said Huawei CEO in a statement.
As a reaction, the Chinese company is likely to look toward other chipset vendors. Samsung may be one of them. Another possible option is the Chinese SMIC, which, in fact, already supplies semiconductors to Huawei. The company has been responsible for the production of the Kirin 710A processors.
The problem is that, compared to TSMC, SMIC manufacturing unit is quite small. However, the company has just received an investment worth $2.2 billion from the Chinese government. Yet, it is unlikely to cope with demand from the Chinese company.