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US Govt cuts off Huawei from TSMC, a vital supplier for Kirin 990 chips

It has been a year since the US government had imposed a ban on Huawei which restricts it from dealing with American tech companies. Unfortunately, the Trump administration has recently extended the ban for another full year until May 2021. Although Huawei has been able to somewhat circumvent the operating system limitation with Huawei Mobile Services, it appears that the US government is now preventing Huawei from producing its high-end Kirin chips.

Huawei currently produces its chipsets such as the Kirin 810, Kirin 980, Kirin 990 and Kirin 990 5G that are found on most of its products. Similar to Qualcomm, Nvidia and Apple, Huawei’s HiSilicon is a fabless semiconductor company and they rely on semiconductors from companies such as Taiwan Semiconductor Manufacturing Co (TSMC).

US restricts TSMC semiconductor sales to Huawei

According to the latest changes by US Department of Commerce that were released on Friday, the new restrictions cover foreign-produced items that use US-based software and technology. This specifically covers semiconductor designs and chipsets produced by Huawei and its affiliate such as HiSilicon. It is reported that TSMC is working with its lawyers in the US to ensure how to interpret any new rules that may emerge over time.

It might be possible for TSMC to request an exemption which will allow them to do business with Huawei. For example, Microsoft could still supply its Windows software for Huawei and Honor laptops after it was granted a license last year. It was also reported that Google is also applying for an exemption as well which will allow Huawei to use its apps and services, but there are no new developments on the matter.

TSMC to build semiconductor fab in the US

Interestingly, before the new rules were revealed by the Department of Commerce, TSMC had announced that it will be investing USD 12 billion to build an advanced semiconductor fab in Arizona, United States with the support by the US government.

SEE ALSO:  Report: Huawei considers selling off the Honor brand

The facility will use TSMC’s 5nm technology for wafer fabrication with a capacity of producing 20,000 semiconductor wafer each month. The plant will create over 1,600 high-tech professional jobs directly and potentially thousands of indirect jobs in the semiconductor ecosystem.

However, there are no assurance given to TSMC that it would obtain a license to sell its chips to Huawei. It is estimated that China accounted for 20% of TSMC’s global sales while 60% of sales are from the US.

Huawei to turn to SMIC

Huawei had anticipated further restrictions from the US government and they have gradually shifted some production from TSMC to Semiconductor Manufacturing International Corp (SMIC) that’s based in Shanghai. Although the move is seen as a motivator for Chinese companies to accelerate the development of home-grown technology, SMIC is seen as a second-tier manufacturer.

While TSMC is currently working on 5nm process technology, SMIC had only started to introduce 14nm tech in late 2019. There’s an obvious gap in skills and capability. Experts have opined that the latest Kirin chips can only be made by TSMC but they may outsource older Kirin chips to SMIC.

Huawei had recently introduced the Kirin 710A chip that’s manufactured by SMIC and it’s a derivative of the Kirin 710. It is still based on a 14nm FinFET process with a main frequency of 2GHz.

[ SOURCE 2 3, VIA ]

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Alexander Wong