US ban bites: TSMC said to cut off Huawei Kirin SoC orders
The US government is doing its best to kill off Huawei’s smartphone ambitions. The Trump Administration has extended Huawei’s trade ban adding some new clauses targeting its ability to supply its smartphones with its own HiSilicon Kirin SoCs. The US Commerce Department states explicitly that it aims to “strategically target Huawei’s acquisition of semiconductors that are the product of certain US software and technology.”
The consequences of the latest announcement have been swift. The Nikkei Asian Review reports that Taiwan Semiconductor Manufacturing Company (TSMC) has halted any new orders from Huawei’s HiSilicon. Until now, Huawei has been able to continue shipping smartphones using the Android Open Source Project tweaked with its EMUI user interface skin running on its own chips. Without any chips to put in its devices, it won’t matter what software it has at its disposal. Huawei’s existing orders will be honored, but supply will terminate mid-September.
Although Huawei’s HiSilicon chips are UK ARM-based, they do still rely on certain elements of US-based intellectual property meaning seeking supply from elsewhere is currently pointless. One potential workaround would be to use China-based Semiconductor Manufacturing International Corporation (SMIC), but it is a long way from ready to replace TSMC as a suitable alternative. Huawei’s rotating Chairman Guo Ping has called the US decision “arbitrary and pernicious, and threatens to undermine the entire industry worldwide.”
For its part TSMC is one of the world’s largest chip fabricators and, coincidentally or not, has recently struck a deal to establish a 5nm foundry in the US. This is expected to create up to 1,600 jobs. Although the factory will take several years to get up and running operationally, TSMC clearly isn’t going to undertake any actions that might destabilize any US government incentives it may have been offered. It doesn’t take much to read between the lines to arrive at the conclusion that TSMC was encouraged to act swiftly following the US Commerce Department announcement.
With US-China relations at an all-time low, it seems the road back for Huawei will be very difficult under the current circumstances. The uneasy relationship between the two countries could also have wider ramifications for the tech industry with so many companies, including Apple, reliant on China for much of their production. It is not yet clear if China will further destabilize the situation by taking any punitive measures in return, but it certainly has a strong hand should it want to play it. The tech industry is certainly watching on with bated breath.