What Huawei Losing TSMC Chips Will Mean For Its Phones

What Huawei Losing TSMC Chips Will Mean For Its Phones

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Huawei will likely be forced to look for an alternate chip supplier following the latest US restrictions, but that’s easier said than done.

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What Huawei Losing TSMC Chips Will Mean For Its Phones

Taiwan Semiconductor Manufacturing Corporation (TSMC) is reported to have stopped taking chip orders from Huawei. This comes after the US put restrictions on the ability for foreign chip manufacturers who use American technology to do business with the company. The effects of this could prove seriously problematic for Huawei.

Huawei devices and apps have been criticized by some for being unsafe and the company has even been accused by US intelligence of using security backdoors in its devices to secretly gather information on users. However, the proof is yet to be made public and many consider the tough criticism of Huawei by the federal government as a political move to frustrate China and prevent Huawei from getting a foothold in the upcoming 5G revolution. Much of this comes down to the fact that companies in mainland China are required to share their data with the Chinese government. While a concern, there is yet to be any conclusive evidence provided to suggest that Huawei is actively doing anything wrong. Nevertheless, that hasn’t stopped the US from attempting to hamper Huawei’s business plans and operations. For instance, the US government blacklisted Huawei and placed restrictions on American companies from doing business with the Chinese tech giant.

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The previous restrictions have now been extended to limit foreign chip-makers from supplying their products to Huawei. As a result, the overseas semiconductor companies that use American equipment, intellectual property (IP), or design software for the manufacture of processors will have to get a US license before they can ship to Huawei. As Nikkei Asian Review reports, this is thought to have led to TSMC halting future chip orders to the Chinese company. This could result in a serious supply problem for Huawei, since the Taiwanese company supplies more than 98 percent of SoCs used in Huawei smartphones. Although the company designs its own chips through its semiconductor division, HiSilicon, the manufacturing is largely carried out by TSMC. Now, with the halting of any future orders, Huawei will have to act fast to find an alternative solution.

Huawei’s Options For Chip-making

Although Huawei has its own Kirin processors to power its devices, the company does not yet have the capability of manufacturing them in-house. The obvious choice for chip-manufacturing is Semiconductor Manufacturing International Corporation (SMIC). This is one of China’s top chip manufacturers and it already does business with Huawei. A CNBC report suggests that SMIC are scaling up to manufacture the Kirin 710 chip found in Honor-branded smartphones. However, SMIC will also have to scale up to manufacture other, and more powerful Kirin chips, including the Kirin 990 5G processor that Huawei hopes will underpin its 5G phone ambitions.

What Huawei needs are manufacturers who are as good as TSMC, with its scale and technical proficiency. Getting SoCs from Qualcomm is not an option since that’s an American company, although Huawei could approach Samsung – the world’s biggest smartphone manufacturer. However, that might not happen considering Samsung is Huawei’s biggest competitor in the smartphone market. Not to mention, Samsung might not want to draw any attention onto itself by the US government by helping Huawei in this instance.

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Whatever the solution, Huawei better find it fast while in the meantime, ensuring its device manufacturing, as well as sales, remain uninterrupted. Any delay could give competitors a chance to cut into the company’s huge smartphone market share, both in China and elsewhere. Therefore, Huawei needs to diversify its processor supply chain soon, and possibly build up its own manufacturing capabilities with a view to becoming even more self-sufficient over the long-term, like Samsung.

Link Source : https://screenrant.com/huawei-phones-losing-tsmc-chips-explained/

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