Huawei order cut may cost TSMC a 30% drop in sales: experts

Source: Global Times Published: 2020/7/17 22:58:40

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 Company (TSMC), the world's biggest semiconductor manufacturer, could face a 20-30 percent drop in sales in the fourth quarter, if it suspends new orders from Huawei in September, and Huawei's smartphone shipments and new phone launches could also be disrupted, experts said.

TSMC does not plan to ship any wafers to Huawei after September 14, the company said in a letter to the Global Times on Friday, referring to a recent statement made by company Chairman Mark Liu at an investors' conference on Thursday.

BIS in May rolled out plans to restrict Huawei from using US technology to design and manufacture its semiconductors abroad. The US Commerce Department upgraded export controls on May 15, requiring overseas manufacturers of semiconductors, which are using US software and technology, to obtain a license from the US before selling to Huawei.

Huawei's smartphone chip orders have been slowly tilting toward other semiconductor makers such as MediaTek and Semiconductor Manufacturing International Corp. (SMIC), analysts said.

"There is also a belief that the Huawei Mate 40 will be launched in September with two different editions - the Pro and the standard one," Xiang said, noting that the Pro may have TSMC's chips, and the standard one from MediaTek.

Meanwhile, a Kirin 710 order originally made to TSMC was transferred to SMIC for its Kirin 710A this year, the Global Times has learned.

However, industry analyst Liang Zhenpeng told the Global Times on Friday that other semiconductor providers may not yet be in the same league.

"SMIC may not be able to compete with TSMC on the advancement of chip production technology. Thus Huawei smartphone shipment and the launch cycle of new phones could be impacted if the suspension takes place," Liang said.

He predicted Huawei's handset sales could also fall in the fourth quarter. 

Huawei may see an impact next year when its stockpile from TSMC runs out, analysts said.

The loss of Huawei, TSMC's key client, would also deal a blow to TSMC's sales, which could possibly drop by 30 percent in the fourth quarter, Liang said.

Some doubt if TSMC would follow the US this time, despite mounting pressure from the Trump administration to cut off their supply chain with Huawei.

TSMC said in May that they would build an advanced production line in the US, but no practical action has been taken so far. 

Huawei may see an impact next year when its stockpile from TSMC runs out, analysts said, adding Huawei is stocking up.


blog comments powered by Disqus