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.

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Source: Nikkei Asia

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  • tuxRoller - Monday, July 20, 2020 - link

    Can someone check my math?
    China ≈ 1.4 billion
    rest of the world ≈ 6.4 billion

    Thus the rest of the world, potentially, has a larger supply of talent than China.

    Also, China will still need access to external commodities, if nothing else.
    Going isolationist is not a good thing... but Trump isn't a savvy player (he's got one trick) and certainly isn't a long-term thinker.
    Reply
  • FunBunny2 - Saturday, July 25, 2020 - link

    last time I looked, China had a lock on much of the variety and supply of rare earths. try building much of anything computer without them. Reply
  • s.yu - Monday, July 27, 2020 - link

    Yeah, that's why there's active development of sources from Vietnam, Brazil and Australia. Reply
  • anonomouse - Friday, July 17, 2020 - link

    Not to argue semantics, but isn’t TSMC’s largest customer widely held to be Apple? The TSMC financial report that lists Company A at 23% in 2019 and 22% in 2018. Meanwhile, they list a Company B growing from 8% in 2018 to 14% in 2019 and given Apple’s smartphone sales trend it’s hard to imagine they doubled their purchases between those two years. Whereas by all accounts Huawei has tremendous growth both in smartphones and in other markets during the same period. Reply
  • eek2121 - Monday, July 20, 2020 - link

    No, AMD currently is their largest, according to recent reports. Every console, CPU, and GPU is currently made by AMD using TSMC 7nm. Reply
  • eastcoast_pete - Friday, July 17, 2020 - link

    The main question IMO is where Huawei/HiSilicon will move its manufacturing to. Assuming this ban continues, China will certainly move even more aggressively on building advanced fabs in China. Reply
  • brucethemoose - Friday, July 17, 2020 - link

    Probably SMIC's smallest node. Perhaps they'll go for a 2-chiplet design to conserve SMIC's capacity.

    Memory will be an issue as well. Flash... maybe not so much?
    Reply
  • soresu - Saturday, July 18, 2020 - link

    China already has a company going for 128 layer NAND flash - YMTC. Reply
  • s.yu - Saturday, July 18, 2020 - link

    Yes, which requires a completely different process from logic. YMTC and a few other rising Chinese players will probably crash the NAND market soon. Reply
  • azfacea - Monday, July 20, 2020 - link

    NAND is not going to crash anytime soon. it is drinking market share from hard drives and has plenty of room for growth. and as you correctly pointed out its not the same as CMOS. they dont need very expensive equipment. you just need the very reliable etching techniques. otherwise pre-immersion tools should suffice. Reply

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