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Samsung will stop providing mobile phone chips to Huawei under U.S. Sanctions

Huawei Office

Samsung will stop providing mobile phone chips to Huawei under U.S. Sanctions

Huawei may soon encounter more trouble procuring parts for its mobile phones. According to South Korea’s Chosun Ilbo (via UPI), Samsung and memory manufacturer SK Hynix plan to suspend sales of parts to the Chinese company on September 15.

These restrictions prohibit non-U.S. companies from selling components developed using U.S.-made equipment or software to Huawei. The ban has already affected Huawei’s business.

Richard Yu of the company recently stated that due to trade sanctions, the Mate 40 will use Huawei’s final high-end Kirin processor. This ban may cause damage to Samsung and SK Hynix, just as it does to Huawei.

Taking SK Hynix as an example, 40% of its USD 13.3 billion revenue in the first half of 2020 will come from exports to China.

Huawei Office

Huawei is trying to reduce its dependence on foreign chip suppliers by purchasing components from China’s leading chip foundry SMIC. However, the ongoing trade war between the Trump administration and China may not perpetuate this choice.

In early September, the Department of Defense confirmed that it might add chip manufacturers to the US Department of Commerce’s list of the same entities to prevent US companies from dealing with Huawei.

If the Trump administration passes this move, it will prevent SMIC from obtaining the equipment needed to make chips for Huawei. Even if SMIC avoids a potential ban, it is two generations behind Taiwan Semiconductor Manufacturing Co., a former chip supplier of Huawei.

It will take some time for the company to produce processors for Huawei’s flagship phones. For Huawei, the ideal situation is that it can start buying parts from Samsung and other component manufacturers.

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