President Donald Trump’s administration has repeatedly launched sanctions against Huawei. However, the production and business activities of the telecommunications giant in the Chinese market are still not affected too much. Even Huawei’s smartphone sales are still higher than Apple, even though it cannot be sold in Europe.
But things are getting worse, after the Trump administration launched the latest sanctions. The US Department of Commerce has changed the policy, making TSMC need to apply for permission to produce chips for Huawei, because TSMC’s chip production line uses American technology and design.
Huawei is in a state of emergency, when the number of parts in stock is running out.
Huawei’s headquarters in Shenzhen are in a state of emergency. According to a Bloomberg report, an internal source revealed that the number of reserve chips to produce telecommunications equipment will run out in the next few months.
Huawei’s board of directors holds dozens of meetings, but there are no solutions to help the company overcome its current difficulties. Although Huawei can order chips from Samsung or MediaTek, the orders are too large for both of them to meet.
The US, after a series of sanctions against Huawei, finally found the weakness of the Chinese giant. It is the HiSilicon chip manufacturing unit, founded 16 years ago, constantly striving to be able to produce its own processing chips, so that it does not depend on American companies. . But ironically, until now, HiSilicon still has to use American chip designs.
The truth is that all chip manufacturers in the world, from TSMC to SMIC, need American companies’ equipment and software, such as Applied Materials, to make chips for Samsung and Apple. or Huawei. With the new rules set by the US, it means that manufacturers like TSMC are completely dependent on American technology. As a result, any HiSilicon chip design cannot be produced on its own, but only drawings on paper.
Huawei could be a complete failure in the 5G race, if no solution is found.
Not only are the processing chips for Huawei smartphones affected, but even the telecommunications chips used for 5G base stations cannot be produced. U.S. sanctions have hit Huawei’s most core telecommunications business right in the middle of a tense 5G race.
Huawei executives tried to find a solution, but couldn’t. Basically, it is impossible to manufacture next-generation chips without US technology. From the most basic wafers, to the manufacturing machinery, ASML Holding’s UV photolithography process (although it is a Dutch company, the photolithography machines still use American technology).
Huawei is at the center of Beijing’s $ 1.4 trillion New Infrastructure Initiative, aiming to take the lead in the 5G technology race. But until now, Huawei is unlikely to be able to complete more than 90 contracts to build infrastructure for local carriers, let alone invade the world market.
The only consolation at the moment for Huawei is probably still time. According to the report, the number of components in stock will be sufficient until the end of this year. In the meantime, Huawei is forced to find a solution, otherwise the collapse of the world’s No. 1 telecommunications giant will be inevitable.