TSMC faces big losses from waiving Huawei orders

Source:Global Times Published: 2020/6/23 22:53:40

Photo taken on Nov. 20, 2019 shows Huawei's exhibition booth during a press preview for the 2019 World 5G Convention in Beijing, capital of China.(Xinhua/Li Xin)

Taiwan Semiconductor Manufacturing Co (TSMC) will face losses of hundreds of millions of yuan from losing Huawei orders even if it can find alternative customers, said veteran Chinese telecommunications expert Ma Jihua. 

The Taiwan-based chipmaker found itself in a dilemma between one of its biggest clients, Huawei, and the US government, which has recently outlined a proposal to amend chip export rules that could hinder TSMC's sales to Huawei, the world's biggest supplier of telecommunications equipment. 

A Reuters report on Tuesday cited Kung Ming-hsin, an official from Taiwan island as saying that TSMC has already offset the lost Huawei orders with alternative customers. 

"As for TSMC, although their orders no longer include Huawei, they've quickly been filled up as other people really need them," said the official.

TSMC Chairman Mark Liu also said in an interview that TSMC can quickly fill the order gap if the US restrictions against Huawei kick in, though he said that he hoped the restrictions won't happen. 

However, things won't be as easy as they claim, Ma said, as TSMC's losses could reach hundreds of millions of yuan if it loses such a big client as Huawei. 

"For one thing, TSMC will pay extra costs for staff training and production arrangements if it shifts orders from Huawei to other clients. For another thing, TSMC will likely face demands for lower prices as its power in the industry will decline after losing so big a client as Huawei," Ma told the Global Times.

There will be some lurking risks as well, as a new mainland-based supply chain might be cultivated with the help of Huawei, and the possibility exists that TSMC might be marginalized. 

But Ma acknowledged that it won't be difficult for TSMC to fill Huawei's order gap considering rising market demand. 

A report by Nikkei Asian Review noted that TSMC has recently halted new orders from Huawei in response to tighter US export controls. 

Huawei's orders accounted for 14 percent of TSMC's revenue in 2019, according to media reports. 

Posted in: ECONOMY

blog comments powered by Disqus