Exclusive: U.S. moves to cut Huawei off from global chip suppliers

[striver44]

Chinese telecoms company warns it will find it hard to maintain networks around the world Huawei rotating chairman Guo Ping speaks at the company’s headquarters in Shenzhen on Monday © AFP via Getty Images Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Kathrin Hille in Taipei 3 HOURS AGOPrint this page285 Huawei has warned that its survival is at stake following the US government’s latest efforts to cut the Chinese company off from international semiconductor supplies. In its first official reaction to last Friday’s announcement by the Department of Commerce of the planned new restrictions, Huawei called Washington’s decision “arbitrary and pernicious”. While the company said it was too early to define the consequences of the US’s planned stricter export controls for its business, it indicated that Washington’s move would deal a heavy blow. “We will now work hard to figure out how to survive,” said Guo Ping, rotating chairman, at Huawei’s annual analyst conference. “Survival is the keyword for us now.” The US government, which believes that Huawei is helping the Chinese government conduct cyber-espionage and technology theft, put Huawei on an export control list a year ago, a move aimed at curbing the company’s access to US-made and designed semiconductors needed for products including telecoms network gear and smartphones. But existing US export control rules contain enough loopholes for such supplies to continue. One key avenue has been through sales of chipsets manufactured outside the US, first and foremost by Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker. Recommended US-China trade dispute US escalates China tensions with tighter Huawei controls Washington now intends to amend the rules in a way that any foreign chip manufacturer aiming to sell semiconductors to Huawei using US-made equipment will have to apply for an extra licence — which industry sources expect to be denied. The Department of Commerce has said it will “narrowly and strategically target Huawei’s acquisition of semiconductors”. Huawei missed its original revenue target for last year by $12bn due to restrictions resulting from last May’s listing and reported revenues of $123bn for 2019. But the company argued that the US’s latest move would have a significantly bigger impact. “This new rule will impact the expansion, maintenance and continuous operations of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries,” it said in a statement. “To attack a leading company from another country, the US government has intentionally turned its back on the interests of Huawei’s customers and consumers. This goes against the US government’s claim that it is motivated by network security.” It also claimed the US’s campaign against Huawei would damage the global semiconductor industry. Earlier on Monday, Richard Yu, head of Huawei’s consumer electronics unit, accused the US of fighting to defend its “technology hegemony”. “The so-called cyber security reasons are merely an excuse,” he wrote on WeChat.

https://www.ft.com/content/3c532149-94b2-4023-82e0-b51190dc2c46

 

[Globenim]

lmao TSMC employees are gonna love this Their "ally" didnt stop at stealing their jobs with predatory tactics but is also cuting deep into the core business they have left. And they only one who gets out something of this is their "ally" and Chinese chipmakers losing their competition. Now thats what you call balance.

 

[FairAndUnbiased]

The smallest part of the device is the gate, and this is what really matters. Gate sizes froze at around 30-35nm for a long time. What has been shrinking the most for the past decade were not the devices, but the amount of free space in between them.

A correct observation. The Nyquist limit puts a hard limit on how much data you can transfer on a given wavelength in a singular spatial path, but we've been solidly beating both Nyquist, and the noise floor limits for 2 decades now.

There is a long, long way forward for semiconductor manufacturing still left. We may not beat the single atom density limit, but we can sure do something about continuing increasing effective density despite of it.


Test is of paramount importance, second to inline meteorology for process improvement.

In other words, without test, and metrology, you are trying to do a brain surgery while blind, and can only judge the success is the patient lives after.

Test is important but it is literally low value i.e. it doesn't make much money and can be outsourced easily. Entire test and assembly market is $24B, which is about the size of TSMC by itself. Industry literature literally use "low-value activities" to refer to testing and assembly in opposition to "high value added" activities such as design and foundry (pg 22). It cannot be compared to inline metrology.

 

[tower9]

A

Paul, chill, money talks. The US is fcked big time, their economy is in shits, they need us to buy em beans. The signs are there, just imagine this, Trump is pissed as fck, we technically killed 90k Americans without firing a single bullet, whacked their economy back to 2008 levels, created the worst unemployment since the depression around 30 to 40 mil unemployed. And yet he is still

1) Trading with China?
2) Keeping the phase 1 trade deal
3) Only containing Huawei?
4) Insist on not defaulting?

Come on man, if I were him I would totally ban All trade with China and default the shit out of China. I would be one step from nuking China. If you look at all the signs, US clearly wants to continue trading while wanting to reduce Chinese tech dominance. What will happen? Huawei will weaken of course, but technologically? They would still invest in 6G and BEYOND. China will have 10-15 % unemployment, reduced MNC capacities for diversification reasons but still a dominant manufacturer, but you will see the rise of local champions due to this tech embargo, local companies will fill the niche and grow. US will not decouple they can't afford too. If they decouple a new pole will emerge. The hundreds of billions invested will go to waste.

Remember what they said about the trade war in 2018? ITS BEEN 2 YEARS AND ONE EPIDEMIC. We are still alive and thriving, our economy is restarting so well, I am here, I see the real thing. China is confident that we haven't even reduced interest rates or print trillions, US is printing trillions and reducing rates to zero, that itself shows how friggin desperate they are. Our banks are state owned, we can postpone loan repayment with no interest if someone get unemployed, workers can bunker down in their village for years almost free of cost. CAN US DO THE SAME? Our consumers are majority earn, save and spend type, not borrow to spend type. One month if inactivity nearly crippled the US food stamp system. China was under lockdown for almost 3 months, you see ppl starving!? Due to histourical reasons, the typical Chinese save for rainy days, the only big debt is mortgage which the goverment can easily freeze in times of crisis.

The numbers of dead in the US are inflated. There is heavy politicization of this crisis domestically.

Secondly, the Deep State created and planted this virus in China and elsewhere. You are telling me it is a mere coincidence that this virus is ushering in Cold War 2.0 and just happened to also hit the Iranian elite while it was spreading in China? There are few true coincidences in life.

 

[Paul2]

Actually, yes. All tepid 'corrections' from what I have seen. The one thing that practically terrifies the PDF Chinese is ostracization from the collective. Being accused or even insinuated that a Chinese is 'anti-China' is enough to bring the 'offender' into Party line.

Why do you think so? What makes you think that I am even loyal to China as a state? My village resisted demolition in the middle of Guangzhou for 2 decades. Men on my clan are not afraid of death, let alone some Marxist stragglers.

I toured half the world with China's biggest engineering contractors: Dangote, BUCG, CREC, ECRL, Bandar rail, Astana LRT, Angola, Tanzania, 3 projects in the Gulf, HZBM. I sold more electronics in my life, and shipped more engineering project than most of little pinks can count.

I have a bigger say on what China is to the world, and did more to further our goals that than probably all little pink keyboard warriors on this website taken together. I will listen to what they have to say, when I know they did more to the country, than the country did for them.

chill, money talks. The US is fcked big time, their economy is in shits, they need us to buy em beans. The signs are there, just imagine this, Trump is pissed as fck, we technically killed 90k Americans without firing a single bullet, whacked their economy back to 2008 levels, created the worst unemployment since the depression around 30 to 40 mil unemployed. And yet he is still

1) Trading with China?
2) Keeping the phase 1 trade deal
3) Only containing Huawei?
4) Insist on not defaulting?

Come on man, if I were him I would totally ban All trade with China and default the shit out of China. I would be one step from nuking China. If you look at all the signs, US clearly wants to continue trading while wanting to reduce Chinese tech dominance. What will happen? Huawei will weaken of course, but technologically? They would still invest in 6G and BEYOND. China will have 10-15 % unemployment, reduced MNC capacities for diversification reasons but still a dominant manufacturer, but you will see the rise of local champions due to this tech embargo, local companies will fill the niche and grow. US will not decouple they can't afford too. If they decouple a new pole will emerge. The hundreds of billions invested will go to waste.

Remember what they said about the trade war in 2018? ITS BEEN 2 YEARS AND ONE EPIDEMIC. We are still alive and thriving, our economy is restarting so well, I am here, I see the real thing. China is confident that we haven't even reduced interest rates or print trillions, US is printing trillions and reducing rates to zero, that itself shows how friggin desperate they are. Our banks are state owned, we can postpone loan repayment with no interest if someone get unemployed, workers can bunker down in their village for years almost free of cost. CAN US DO THE SAME? Our consumers are majority earn, save and spend type, not borrow to spend type. One month if inactivity nearly crippled the US food stamp system. China was under lockdown for almost 3 months, you see ppl starving!? Due to histourical reasons, the typical Chinese save for rainy days, the only big debt is mortgage which the goverment can easily freeze in times of crisis.

Mr. Patriot, If you read what I write even a bit more thoroughly, it is not US I am concerned about.

USA can take its 20% share of our foreign trade and go up in smoke tomorrow, but we will still have to live in China along with all the bugs we have here. And those are far bigger problem...

And we will have to face the rest of the world, the rest of the world is also not going anywhere either. Take a look how USSR fared, how fast its client states flipped on them in late seventies, and again in eighties.

Test us the least complex of semiconductor chain bro.

If you think like this, then you are thinking like people who run Unigroup, and the Big Fund, and who waster billions of state money on 4 scrapped fab projects in a row.

 

[riscol]

(ex)TSMC employees can always move to China for job opportunities

 

[Clutch]

Huawei was built through the thefts of western patents and intellectual rights.

That is why China is the worlds largest market for Fakes.

 

[Han Patriot]

Mr. Patriot, If you read what I write even a bit more thoroughly, it is not US I am concerned about.

USA can take its 20% share of our foreign trade and go up in smoke tomorrow, but we will still have to live in China along with all the bugs we have here. And those are far bigger problem...

And we will have to face the rest of the world, the rest of the world is also not going anywhere either. Take a look how USSR fared, how fast its client states flipped on them in late seventies, and again in eighties.

If you think like this, then you are thinking like people who run Unigroup, and the Big Fund, and who waster billions of state money on 4 scrapped fab projects in a row.

I do read Paul and I think what you are saying is only half correct, comparing current China to Soviet Union is very ignorant of the real situation. I think China is in transition and the system self corrects. Its not static and its governed by very capable leaders albeit some which are corrupted. I am also very supportive of our free press aka the Western Media, they scrutinise us so much so that we have had to improve tremendously. So does China have it flaws? Yes of course, let's work with what we have and improve it, don't give a defeatist attitude. This virus showed the world how a powerful coordinated government can achieve.

Can you tell me which fab were scrapped? Why were they scrapped? no fab is gonna make money if they are forced to use equipment 2 generations behind.

The numbers of dead in the US are inflated. There is heavy politicization of this crisis domestically.

Secondly, the Deep State created and planted this virus in China and elsewhere. You are telling me it is a mere coincidence that this virus is ushering in Cold War 2.0 and just happened to also hit the Iranian elite while it was spreading in China? There are few true coincidences in life.

Nobody knows man. It could very well be, but I don't think they need yo inflate the death toll by 10 friggin times to prove a point.

 

[Paul2]

Test is important but it is literally low value i.e. it doesn't make much money and can be outsourced easily. Entire test and assembly market is $24B, which is about the size of TSMC by itself. Industry literature literally use "low-value activities" to refer to testing and assembly in opposition to "high value added" activities such as design and foundry (pg 22). It cannot be compared to inline metrology.

Well, then the better it is. For only $24B, our state funds can buy the industry whole, and do the Avago thing with it like 陈福阳 does. OSATs is a juicy industry, and ripe for consolidation too.

 

[Han Patriot]

Huawei was built through the thefts of western patents and intellectual rights.

That is why China is the worlds largest market for Fakes.

Well we steal beg borrow copy innovate. Whatever it takes to catch up and now US is pissed at us because we are capablw of technologically surpassing them. Huawei will give up commercial phones business which is what I predicted 2 years ago and go back to the core high tech 5G equipment business. Let the Xiaomi BBK take the pie, Xiaomi is already eating a big pie in Europe and India. They are a bigger threat than Huawei. They will create entities to manufacture chips in TSMC. A third party layer to but time until 7nm matures in Smic.

 

[flowerfan2020]

Huawei was built through the thefts of western patents and intellectual rights.

That is why China is the worlds largest market for Fakes.

Are you too shame to show your country?

 

[Song Hong]

TSMC have not decided to blow on US.

They day TSMC forgo China, she will become a "US company", revenue from China = 0% and revenue from USA = 70%.

TSMC will be hijacked by US. She will need to do US bidding.

And TSMC will be fighting very hard to make sure it wont happen.

 

[F-22Raptor]

Huawei said on Monday that new US sanctions will put its survival at stake.

But industry executives and analysts predicted that Washington’s move to cut off Huawei’s supply of key computer chips will also have a significant impact on the wider technology supply chain.

“When they first blacklisted Huawei in May last year, it was a big political signal but the effect was limited,” said an executive at a Taiwanese computer chip company. “But the folks at [the Department of] Commerce have had a year to sharpen their knives. The new rules will make a real difference.”


On Friday the US commerce department said it would amend last year’s blacklisting to stop Huawei and its affiliates from buying computer chips that had been made or designed with US equipment. Any company that wishes to manufacture computer chips to Huawei’s designs with US tools now needs to apply for a licence.

US machines from the likes of Applied Materials and Lam Research are used by about 40 per cent of the world’s chipmakers, while software from the likes of Cadence, Synopsis and Mentor is used by 85 per cent, according to Credit Suisse, which said it would be almost impossible to find a fabrication plant, or fab, that could still work with Huawei.

“It will be difficult for any foundry in the world to avoid the impact of this,” said Chris Hsu, an analyst at Trendforce, the technology research firm.

Analysts believe that the new regime will neuter HiSilicon, Huawei’s semiconductor affiliate and China’s largest chip design company.

Taiwan Semiconductor Manufacturing, or TSMC, the world’s largest contract chipmaker, and Semiconductor Manufacturing International, or SMIC, its smaller Chinese rival, currently make the bulk of the HiSilicon-designed chips that go into Huawei smartphones and some of its networking gear.


“We expect both to halt their production of Huawei chips unless a resolution, settlement or loophole is found after a 120-day grace period that allows the foundries to finish the three to four month cycle time of in-process wafers as of May 15,” said Randy Abrams, head of Asian semiconductor research at Credit Suisse, in a note to clients on Monday.

Some industry experts wondered whether SMIC — China’s largest contract chipmaker, which just secured $2.2bn in new state funding on Friday — will respect the new US sanctions.

Arguing that Washington’s move will trigger a sharp escalation in the US-China struggle over technology supremacy, the Taiwanese chip executive said SMIC could “choose to stand with China” and take over at least some of TSMC’s business with HiSilicon.

Analysts said this would almost certainly land SMIC on Washington’s blacklist as well, blocking the path to the semiconductor manufacturing equipment it needs to meet China’s ambitious chip industry expansion plans.

Such a development could be part of a significant broader fallout of the America’s’ “surgical” attack on Huawei’s supply chains.

Geoff Blaber, a vice-president at CCS Insights, the technology research company, said: “There is a huge amount of nervousness that this is not just a tit-for-tat spat between the US and China, but is turning into a technological cold war.”

SMIC’s ability to replace TSMC as Huawei’s leading foundry is limited. HiSilicon’s Kirin chip is being made at three different TSMC fabs in 16 nanometre, 12 nanometre, 7 nanometre and 5 nanometre architectures, accounting for 20 per cent of the Taiwanese group’s production.

According to Mr Hsu, SMIC could theoretically replace the production at the more mature 12 and 16 nanometre technology, but has nothing to offer at TSMC’s more advanced capabilities.

A more likely option for Huawei would therefore be to turn to MediaTek for its smartphone chipsets. The Taiwanese chip design house has already helped dozens of Chinese companies including Xiaomi and Oppo become viable smartphone makers. Industry analysts said since MediaTek’s chips are not custom-made, the new US sanctions, which aim at chips made to Huawei design specifications, should not apply.

Last month Huawei had already mentioned MediaTek as a potential alternative source of chips — alongside China’s Spreadtrum and Korea’s Samsung.

But a much bigger problem for Huawei looms in the telecoms network business which helped it grow into a global technology juggernaut and which still accounts for 35 per cent of its revenue.

There is no alternative supplier in sight for the application-specific chips, or Asic, that power telecoms base stations. “Both HiSilicon and Huawei themselves have aggressively built inventory over the past year, so they will probably be able to finish current 5G orders in China,” said the Taiwanese semiconductor executive. “But beyond that, the future for their network business looks very dark.”

Analysts were more sanguine about the impact on TSMC. Huawei was the world’s third-largest buyer of semiconductors last year behind Apple and Samsung, spending $20.8bn on silicon chips according to Gartner, and accounted for 14 per cent of TSMC’s sales.

But most analysts believe that TSMC will ride out the disruption relatively easily. “There are several other fabless companies that are in need of TSMC fab capacity,” said one analyst who declined to be named. “MediaTek will take up a lot of what is lost from HiSilicon, and others such as Nvidia will pick up some more.”

As a result, analysts said TSMC would lose no more than a single-digit percentage in revenue. “This will become visible at the end of the grace period, from mid-September,” Mr Hsu said. “Only by the fourth quarter will we be able to tell the true impact.”

https://www.ft.com/content/c614afc5-86f8-42b1-9b6c-90bffbd1be8b

 

[Beast]

Lol... America Article? Always self bragging and self assure. As always misleading the rest.

It will indeed have an impact on Huawei but will not be long term. The only effect will be Chinese tech firm will cut off from using American stuff. Deprived them of billion of loyalty money and create another Chinese competitor who will eat into share of American tech firm.

 

[Reashot Xigwin]

Lol... America Article? Always self bragging and self assure. As always misleading the rest.

It will indeed have an impact on Huawei but will not be long term. The only effect will be Chinese tech firm will cut off from using American stuff. Deprived them of billion of loyalty money and create another Chinese competitor who will eat into share of American tech firm.

Cut off from the global market & access to critical technology is pretty much a death sentence for any company.

If China didn't have such a large population & state intervention Huawei would have gone under years ago.