Samsung Electronics and SK Hynix plan to stop supplying Huawei with semiconductors to make phones by September 15.
Samsung made this decision to comply with the new set of rules imposed by the US government in dealing with the Chinese tech giant.
Huawei finds itself looking for alternative suppliers of semiconductors to counter the US sanction. Besides Samsung, Taiwanese chip manufacturer TSMC also halted supplying Huawei with semiconductors earlier this year.
A Threat to National Security
The US government insisted that Huawei is a threat to national security and that the Chinese tech company is allegedly involved in espionage and steals US technology. The United States accused Huawei of manipulating telecommunications back doors to spy for the Chinese government. But the phone maker giant denied the allegations.
The US introduced stringent sanctions in August, which ban the selling of components containing US technology to non-American companies. Special approval will be needed to allow such sales.
The new rules will hurt Huawei’s sales as the phone maker can no longer make Kirin chipsets being used to manufacture its smartphones. Huawei has become a top smartphone maker after its unseated Apple as the second-largest smartphone manufacturer.
Observers said that it is part of the ongoing trade war between the US and China, which lead restrictions to Chinese companies such as Huawei, WeChat, and TikTok.
China Made Chips in Development
At the moment, Huawei has very few options as significant manufacturers of phone components have closed their doors. It seems that Huawei will find it hard to find alternative suppliers since many tech companies are cautious of the US sanctions.
On the bright side, the Chinese government is currently funding a local company, SMIC, that could serve as an alternative source of semiconductors. However, the US government warned that they might impose a sanction against SMIC if it supplies Huawei. Reports said that US chip manufacturer Qualcomm is trying to persuade the American government to give them special permission to provide Huawei with components.
The US sanction will not only hurt the sales of Huawei but also sales of Samsung. China is one of the largest customers of the company. For the first half of the year, 40% of Samsung’s revenue was generated from dealing with Chinese companies, including those part of Huawei’s production line.