What you need to know
- The Trump administration is reportedly planning to change U.S. regulations to allow it to block chip supplies to Huawei from TSMC and other chipmakers.
- If the proposal is approved, it would be a massive blow to Huawei's smartphone business.
- The U.S. Commerce Department has declined to comment on the proposal.
Huawei lost access to Google services last year after the Chinese company was put on the U.S. Commerce Department's "Entity List." While Huawei's smartphone business has not been severely affected by the U.S. blacklist so far, a new report from Reuters claims the Trump administration is mulling changing U.S. regulations that could cut Huawei off from global chip suppliers. The news comes less than a week after the U.S. Commerce Department issued a 45-day extension to allow American firms to continue trading with Huawei.
By altering the Foreign Direct Product Rule, the U.S. government will be able to force foreign companies using American chipmaking equipment to get a U.S. license before they can supply chips to Huawei. While the U.S. Commerce Department declined to comment on the draft proposal, Huawei is yet to respond to requests for comment.
Citing a trusted source, the Reuters report says while the chip proposal has been drafted, it isn't certain that it will be approved. Needless to say, the proposal would be a massive blow to both Huawei as well as TSMC. The Taiwanese chipmaker has been working with Huawei subsidiary HiSilicon to manufacture Kirin chipsets for a long time now.
A report from China's Everbright Securities had revealed that the majority of chip makers depend on U.S. equipment. Manufacturing any chipsets without U.S. equipment would be very difficult as there is no production line in China that uses only 'made in China' equipment.
