Huawei Rings Korea-Based Semiconductor Companies For Stable Chips Supply

• Taiwan Semiconductor Manufacturing Company (TSMC) had stopped taking new orders from Huawei
• Huawei is already one of the biggest clients of Samsung and SK Hynix

China-headquartered Huawei has sought assurances over sustainable semiconductor chips supply from Samsung and SK Hynix. Already one of the two companies’ biggest clients, Huawei might have done the same over TSMC not accepting any new orders from it.

A report published by the Korea Economic Daily stated that Huawei’s representatives called senior officials at Samsung and SK Hynix and inquired about a stable supply of the semiconductors. It is to be noted here that the recent law modifications by the US restrict several company’s from providing chips to Huawei.

$8.1 billion spending per year

Huawei, every year spends approximately $8.1 billion on buying DRAM and NAND flash memory from the likes of Samsung and SK Hynix. Interestingly, Samsung and SK Hynix supply around 70 per cent of world’s total requirement of DRAM chips.

TSMC, the world’s largest contract chipmaker has stopped taking any new orders from China-based Huawei. A report published by the Nikkei Asian Review stated that these developments as a result of tighter U.S. export controls aimed at limiting the Chinese company’s access to crucial chip supplies

It is to be noted here that the U.S. Commerce Department had announced some new mandates recently. These mandates require all non-US chip makers using America-made equipment, intellectual property or design software to apply for a license before shipping any chips to Huawei.

Interestingly, Huawei is among the top five customers of TSMC. In fact, most of Huawei’s flagship smartphones come powered by chips manufactured at TSMC’s facilities. TSMC had recently announced its intention to build and operate an advanced semiconductor fab in the United States.

Construction is planned to start in 2021 with production targeted to begin in 2024. TSMC’s total spending on this project, including capital expenditure, will be approximately US$12 billion from 2021 to 2029.