US blocks many chip makers from supplying HiSilicon Kirin SoCs to Huawei

It’s been one year since Huawei was placed on the U.S. Commerce Department’s Entity List, barring U.S. based companies from doing business with Huawei and its fully-owned subsidiaries. That ban has never been in full effect as the U.S. keeps extending Huawei’s Temporary General License, allowing them to keep their licenses to distribute Google Mobile Services on devices introduced before the ban. The main result of that ban has been that Huawei can’t ship new smartphones (even under its Honor sub-brand) with Google Mobile Services, and that will remain true until at least May 2021. Now, the U.S. Government is escalating trade restrictions even further by moving to block many chip makers from supplying HiSilicon Kirin SoCs to Huawei.

Today, the U.S. Commerce Department amended an export rule to block shipments of chips to Huawei. This move was made to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain US software and technology.” Secretary of Commerce Wilbur Ross said, “Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort.” Essentially, the U.S. feels Huawei was exploiting a loophole in the previous ban, so the U.S. is now tightening the rules.

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The rule prevents foreign manufacturers who use American software and technology from shipping products to Huawei unless they get a license from the U.S. This would mean that Taiwan Semiconductor Manufacturing Co. (TSMC), which makes most of the HiSilicon Kirin chips, would be blocked from shipping chips to the Chinese company. Other contract chipmakers that likely use some American technology, such as Samsung Foundry and Global Foundries, would be blocked as well, but they don’t provide much (if anything) to Huawei already.

Shanghai-based SMIC is the only chip maker truly safe from this restriction, and they actually produced Huawei’s new 14nm Kirin 710A chip. The problem with SMIC, for Huawei at least, is they are not nearly as advanced as TSMC or Samsung. This new rule also comes at an interesting time for TSMC, who just announced plans to open a $12 billion factory in Arizona.

Unlike the Android license restriction on new devices, this new rule is much more difficult for Huawei to work around. Without Google apps, the company can sort of “retreat” to its home market of China and hope to still sell enough devices. This new restriction, however, will affect even those devices launched exclusively in China. The company will now need to rely on its existing stock of chips or the less advanced SMIC for production.

Source: U.S. Commerce Dept. | Via: Reuters

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