Huawei Focuses on Semiconductor Stockpiling During US Sanctions Grace Period

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Chinese telecommunications equipment company Huawei is expected to focus intensively on stockpiling semiconductor chips during the 120-day grace period granted in relation to the U.S. government's sales sanctions.

On the 19th, China's Global Times, citing industry insiders, diagnosed this situation and reported that global semiconductor manufacturers, including Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturing) company, will exert their production capacity focusing on supplying Huawei during the 120-day grace period.

According to Taiwanese media, TSMC received a semiconductor chip order worth $700 million from Huawei just before the U.S. Department of Commerce announced the sales sanctions decision. Due to the urgent order, TSMC is known to concentrate all its efforts on producing 5-nanometer and 7-nanometer chips ordered by Huawei for the time being. An industry insider said, "Huawei's semiconductor order was placed last week, right before the U.S. Department of Commerce announced the sanctions," adding, "(To supply within the grace period) the remaining time is short. From now on, it is a matter of speed."

On the 15th, the U.S. Department of Commerce regulated that semiconductor chips manufactured in third countries using U.S. technology cannot be sold to Huawei. This is a stronger measure than the one in May last year, which blacklisted Huawei and required semiconductor companies with production facilities in the U.S. to obtain prior approval to transact with Huawei. Instead, the U.S. allowed a 120-day grace period, permitting shipments of already ordered quantities from Huawei to proceed as scheduled until mid-September.

Regarding this, Ma Zhihua, a Chinese IT industry expert, told Global Times, "Since last Friday marked one year since Huawei was blacklisted, Huawei must have anticipated the U.S. would strengthen its sanctions," explaining, "This is the background behind Huawei's rush to place urgent orders in advance." He added, "TSMC, as Huawei is a 'big spender' customer, will inevitably focus more resources on supplying Huawei," and noted, "This order covers about half a year’s supply."

On the 15th, when the U.S. sanctions were announced, Japanese media Nikkei Asian Review reported that TSMC had stopped accepting new semiconductor orders from Huawei, but TSMC dismissed the report as a rumor, stating that detailed information about orders is not disclosed. It is said that before the U.S. sanctions announcement, Huawei placed urgent orders not only with TSMC but also with other semiconductor foundry companies, and there is a possibility that these companies will supply the ordered quantities within the 120-day grace period.

Meanwhile, Global Times reported that after the U.S. sanctions, Huawei will rely on domestic Chinese foundry companies like SMIC to cover chip supply shortages, but in the worst case, when chip inventory is depleted, Huawei might sell off or downsize its advanced device business and focus solely on its core telecommunications equipment manufacturing sector.

This content was produced with the assistance of AI translation services.