What you need to know
- Taiwanese chipmaker TSMC has stopped taking new orders from Huawei.
- A new rule change was announced by the U.S. last week, requiring chipmakers using American technology to obtain a license before supplying to Huawei and its subsidiaries.
- While the decision will have a massive impact on both Huawei and TSMC, the chipmaker has no choice but to follow the new U.S. rules.
The U.S. Commerce Department had announced a new rule change last week, aimed at cutting Huawei off from global chip suppliers. According to Nikkei, Taiwanese chipmaker TSMC has stopped taking new orders from Huawei in response to the new restrictions.
Citing multiple sources, the publication says the decision was difficult for TSMC as Huawei is its second-biggest client. All of the Kirin mobile processors designed by Huawei subsidiary HiSilicon were so far manufactured by TSMC. In addition to mobile processors, Huawei depended heavily on TSMC for its AI processors and networking chips as well.
The rule change, which is aimed at targeting Huawei and its subsidiaries, makes it mandatory for foreign chipmakers to get a license from the U.S. before supplying any chips to the Chinese company. However, chipmakers can continue to supply chips that went into production before May 15 until September 14. For all other shipments, however, a license will be required.
Even though Huawei hasn't revealed what it plans to do next, the company did suggest last month that it could switch to Samsung for chip supplies. Apart from Samsung, the company is said to be considering buying chips from China's Semiconductor Manufacturing International Corporation (SMIC) as well.
Huawei has issued the following statement opposing the changes made by the U.S. to the foreign direct product rule:
In its relentless pursuit to tighten its stranglehold on our company, the US government has decided to proceed and completely ignore the concerns of many companies and industry associations. This decision was arbitrary and pernicious, and threatens to undermine the entire industry worldwide. This new rule will impact the expansion, maintenance, and continuous operations of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries. We expect that our business will inevitably be affected. We will try all we can to seek a solution.
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