Well they better speed up the 7nm Fab construction a storm is brewing. they have 1 year to come up with a plan Depending on TSMC is not realistic
It is Deja Vu again the pacific war was precipitate by oil embargo forcing Japan to invade SEA
Huawei and suppliers dust off backup plans to prepare for storm
Asian chipmakers TSMC, Toshiba Memory and Innolux assess US ban
CHENG TING-FANG, LAULY LI, RURIKA IMAHASHI and ALEX FANG, Nikkei staff writersMAY 18, 2019 03:52 JST
Huawei urged suppliers to keep making deliveries despite new U.S. measures that could block its access to key American technologies. (Nikkei montage/Getty Images)
TAIPEI/TOKYO/NEW YORK -- Huawei Technologies is asking its top Asian chipmakers to maintain deliveries after Washington announced draconian measures to curb the Chinese telecommunications giant's access to American technology, sources familiar with the matter said.
, the most important chip producer for Huawei's mobile and networking core processors, said it will maintain supplies for the time being even though it continues to assess the impact of Washington's decision this week to bar Huawei from receiving U.S. technologies.
"We have established a complicated and sophisticated export control compliance system," TSMC spokesperson Elizabeth Sun said. "Based upon the data in the system we are not changing our shipping practice for the time being."
But the Taiwanese chip titan hinted that it could suspend supplies if ongoing reviews lead it to a different conclusion.
The U.S. Department of Commerce said Thursday that it would add Huawei to its Entity List, meaning that the sale or transfer of American technology to the company will require a license, with a presumption of denial. The Trump administration's move strikes at the heart of the ambitions of the Chinese company, which relies heavily on chips and other key components using U.S. technologies.
Toshiba Memory, the world's second-largest NAND flash memory chip supplier, declined to say whether its products contain American technologies as it studies the details of the U.S. regulation.
Display panel maker
, which supplies screens for Huawei smartphones, tablets and notebook computers, said it will talk to Huawei.
"Our executives have discussed it and we think it will have an impact based on our preliminary evaluation, but it is hard to determine the scope of the impact as of now," an Innolux spokesperson said. The Taiwan-based company said its shipping schedule for Huawei currently remains unchanged.
also expressed uncertainty about the impact of the U.S. move to restrict exports to Huawei.
Key American chip suppliers such as Qualcomm and Qorvo had suspended shipments Friday, a source familiar with the matter said, while other U.S. companies are set to follow suit as the restrictions take effect, according to lawyers and industry sources. Most Asian suppliers, including TSMC, Foxconn, Japan Display and Toshiba Memory, are carefully reviewing whether they could be running afoul of American regulations by using such American technologies as software, intellectual property, tools and materials.
Kevin Wolf, a former U.S. assistant secretary of commerce who is now a partner at the Akin Gump Strauss Hauer & Feld law firm in Washington, said anything made in America, and anything of foreign origin that contains a significant percentage of controlled U.S. content, falls within the scope of the rules.
"Whether it's telecom equipment, a toothbrush [or] a product plant," it would require a license to be sold to Huawei, Wolf said.
"The scope of a listing is exports to Huawei directly or indirectly," he said. "That would be how you would prohibit the sale to Company X supplying that content to a Huawei company."
Huawei had attempted to prepare for the worst by , the Nikkei Asian Review has reported. But the company did not expect the restrictions to also cover all foreign suppliers that indirectly use a certain amount of U.S. technologies to build products for it. This caught the Chinese company off-guard, people familiar with the matter said.
President Teresa He Tingbo of Huawei unit HiSilicon Technologies, China's top chip developer, said Huawei is in a battle to survive after its "darkest day" in an open letter early Friday. "The global superpower has ruthlessly made this decision to abruptly sever global technology partnerships and supply chains for no reason," she wrote.
"We actually have foreseen this day for many years, and we do have a backup plan," the letter said.
HiSilicon designs core processor chips for mobile and networking equipment and also builds 5G modems. Huawei's investment in chip design dates back a decade, and the company is far more self-reliant than smaller peer
, which was forced to temporarily halt operations when American technology exports to it were blocked last year.
But Huawei needs TSMC's advanced chip plants to turn its designs into reality. Currently, only , Intel and TSMC have such advanced fabs to produce chips that Huawei and Apple need for their latest smartphones. But Samsung and Intel build chips largely for themselves, not others.
If TSMC cuts off supplies, "Huawei's business could come to a halt and be in trouble," said Mark Li, an analyst with Sanford C. Bernstein.
The company also contacted suppliers in Asia to keep them from abandoning it. "We do receive calls from Huawei to assure us that it will continue placing orders and to assure us that they have enough technology to deal with the storm," a chip industry executive said.
But many market watchers still doubt whether Huawei can survive and ship all its products on schedule in these severe conditions.
"If the U.S. controls the use of Google's Android system on Huawei smartphones, then this could be a killing blow to the company," said Liang Yaguang of global market research firm Kantar Worldpanel in Beijing. While Huawei has started developing its own operating system, it may be years before its software has sufficiently matured to replace Android, the analyst said.
Bernstein's Li also doubts that Huawei can still ship products smoothly once U.S. software and technical support are cut off.
If Huawei falls into chaos and cannot deliver products, "it would be a big disruption for the whole supply chain," GF Securities analyst Jeff Pu said. Such rivals as Apple, Samsung or even Oppo, Vivo and Xiaomi could gain share, but it would still cause great turmoil for the tech sector, he said.
Nikkei Asian Review chief business news correspondent Kenji Kawase and Nikkei staff writer Coco Liu in Hong Kong contributed to this report.
