Samsung and SK Hynix are set to end sales of smartphone components to Huawei from next week, exacerbating the Chinese giant’s supply problems even further.
Reports in South Korea suggest the two companies will cease shipments from September 15 – the very day that new US sanctions against Huawei come into effect.
Not only will those sanctions create further headaches for beleaguered Huawei, it will also deny the two Korean firms valuable revenue streams. As well as being one of the world’s biggest smartphone manufacturers, Samsung is a key supplier of components to the industry – especially memory chips.
Samsung Huawei chips
Huawei has been on the US ‘non-entity’ list since last year, a status that prevents US companies from doing business with it without a licence. This effective blacklisting has limited Huawei’s access to key US technologies such as the Android operating system.
That was already bad enough but earlier this year Washington closed what it believed to be a “technical loophole” that allowed chipmakers to ensure their components are not classified as ‘US-made’ despite including American technologies. Although Huawei has worked hard to reduce its dependency on the US, the ruling threatens the future of its smartphone business.
Following the original blacklisting, Huawei had turned to Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, to produce its custom processors and provide it with other components such as networking chips. However TSMC stopped taking orders from Huawei earlier this year.
The US government’s actions against Huawei are based on national security concerns. Huawei denies any allegations of wrongdoing while the Chinese government believes the sanctions to be part of a wider trade dispute that has also involved ByteDance’s TikTok and more recently Semiconductor Manufacturing International Corp (SMIC).
Samsung and SK Hynix have been approached for comment.