TSMC on Thursday has confirmed that it had stopped processing new orders from Huawei back on May 15th. The news is the first official statement from the company on the matter, since the US Commerce Department’s expansion of rules to require licenses for sales to Huawei of semiconductors which us US technology.

Under the rule change, Taiwan based TSMC is not allowed to sell to Huawei silicon products unless the Chinese vendor receives (an unlikely) license from US regulators. Huawei and TSMC had been given a 3-months grace period in which existing orders were allowed to be processed and shipped. TSMC yesterday has confirmed that the manufacturer does not plan to ship any wafers to Huawei or HiSilicon after September 14th.

It’s been wildly speculated that Huawei had been pre-empting the US ban and making very large orders to TSMC to be able to have a sufficient silicon supply for the rest of the year. However, once this stock runs out and if the political situation hasn’t been resolved by then, it would mean big troubles for the Chinese vendor. Beyond Huawei’s consumer business segment which had grown to be the #2 smartphone vendor in the world, behind Samsung and ahead of Apple, Huawei is an important player in the cellular infrastructure market where they are currently the leading player for telecommunications equipment.

HiSilicon is also a big player in the DTV SoC market, IP camera SoC market, and most recently an entrant in the server CPU market with their in-house Kunpeng 920 chip and custom microarchitecture. Without means to manufacture their designs, it leaves the company in a precarious situation. Other semiconductor foundries are also unlikely to be able to pick up Huawei as a customer as they all use US-made equipment. In theory, even Shanghai based SMIC would be banned from supplying Huawei – in practice we haven’t heard any confirmation on the situation there yet.

As for TSMC, Huawei represented the manufacturer’s biggest customer with a 23% revenue share in 2019. Surprisingly enough, the company states that the Huawei ban is unlikely to have an effect on the company’s revenues, with other customers being able to pick up coveted manufacturing capacity. The company even forecasts 20% year-on-year growth for the July-September period, and is further increasing its capital expenditure for the year to up to $17bn.

Related Reading:

Source: Nikkei Asia

POST A COMMENT

72 Comments

View All Comments

  • t.s - Friday, July 17, 2020 - link

    With DT spearheading, countries, manufacturers, companies, entities blatantly persecuting companies like Huawei. Something like this usually executed stealthily, carefully. Reply
  • Zingam - Friday, July 17, 2020 - link

    I expect this will cause China to become completely self reliant at the end and to start manufacturing all of the equipment themselves and their talent pool is much larger. Reply
  • Santoval - Friday, July 17, 2020 - link

    Yes it will. China, i.e. largely SMIC, must have nearly all the required expertise already via the IP and tech they have "borrowed" from the Americans, the Koreans, the Taiwanese and the Japanese. Just from their joint venture with ARM (where they control the 51% of the company) I expect quite a lot of "transferring".
    The question though is ASML. Could they reverse engineer and reproduce their huge and extremely complex 7nm & 5nm node step-and-scan EUV machines? Unless they can do that or design and build an equivalent machine they cannot fab any of the latest SoCs, either for mobile or for larger factors. And this not a peanuts task, it would be quite a feat.
    Reply
  • ads295 - Friday, July 17, 2020 - link

    EUV is bleeding edge tech right now. Granted, Huawei's newest chips from TSMC would have been fabbed on that, but on a need-to-maintain-continuity basis, the Chinese could still do a lot with 12nm or even 14nm for that matter... Reply
  • Santoval - Friday, July 17, 2020 - link

    After already having released mobile phones with 7nm based SoCs? I wonder how their marketing teams could spin that... Reply
  • Rookierookie - Saturday, July 18, 2020 - link

    Easy, just wait until Trump to issue a ban on the sale of consumer electronics to China. Reply
  • Santoval - Friday, July 17, 2020 - link

    p.s. ASML (who are Dutch btw) have a true monopoly in step-and-scan machines. Companies such as Nikon and Canon, who have been in this business much earlier than ASML, used to compete with them but they gave up at around 28nm.
    One particularly delicate and intricate (and notoriously difficult, if not impossible to reverse engineer and copy) part of their EUV machines is their optics. These are made by Zeiss (a German company) and consist of mirrors polished down to a couple of nanometers scale accuracy. That is about 15 or so atoms. The reason is the very low tolerance and high sensitivity of EUV light to even the smallest lens imperfections, and these optics are the primary reason these machines are so expensive and take so long to manufacture. If the Chinese (or anyone else) could successfully copy and reproduce these mirrors, which I seriously doubt, then the most difficult part of their work would be done.
    Reply
  • BedfordTim - Friday, July 17, 2020 - link

    Is there any reason Zeiss couldn't sell optics to China? Reply
  • FunBunny2 - Friday, July 17, 2020 - link

    Zeiss isn't even the premier optics maker, anyway. that would be Leitz/Leica. polishing mirrors and lens glass (making which is the really tough part, btw) is a hundreds of years old skill. how to do it to 'a couple of nanometers'? use the right compound. how to know what that is? look at the periodic table. one needs measurement gear to know you've polished correctly (just ask the Hubble contractor, Perkin-Elmer NOT, btw NASA itself). and so on. it's all engineering, which isn't all that esoteric. Reply
  • FullmetalTitan - Friday, July 17, 2020 - link

    EUV doesn't use glass optics and mirrors, they use extremely specialized multi-layer masks and exotic optics materials. It took ASML and industry partners over 15 years to get a viable EUV scanner system built for high volume manufacturing Reply

Log in

Don't have an account? Sign up now