USA is considering to cut Huawei out of the global chip suppliers, TSMC is in sight

WASHINGTON (Reuters) – The Trumpet, the administration is considering changing the US rules, allow for the blocking of the supply of chips to Smartphone technology, from companies like taiwan’s TSMC (2330.TW), the world’s largest contract chipmaker, the two sources familiar with the matter said.

FILE PHOTO: The booth of Huawei, is displayed during the 2020 international CES in Las Vegas, Las Vegas, Nevada, USA, on 7 January 2020. REUTERS/Steve Marcus

The new restrictions on trade with China and Huawei are just some of the options to be considered to be a high-level U.S. meetings this week and next. The chip proposal was developed, but its adoption is far from certain, the sources said.

The measure is expected to be a battle of the world. 2 mobile phone maker, as well as TSMC, one of the most important manufacturers of chips for Huawei’s HiSilicon unit, and the mobile phone rivals such as Apple Inc’s (AAPL.(O) and Qualcomm Inc (QCOM.D).

“What they’re trying to do is to make sure that no chips are going to Ascend, that she may be able to control it,” the second source said.

Huawei has been at the heart of a battle for worldwide supremacy between the United States and China. The United States is trying to persuade the allies to conclude, the acceleration of the next-generation 5G networks in the area of the device can also be used by China to spy. Huawei has repeatedly denied the claim.

For the purpose of global chip sales to Huawei, the U.S. government would alter the Foreign Direct Product Rule, that is, the subjects of a number of foreign-made goods are based on U.S. technology or software provided to the U.S. rules and regulations.

Reuters has reported any changes to the line-in the month of November.

Under the proposal, the U.S. government would force foreign companies that are U.S. chipmaking equipment, in order to seek a US licence for the supply of the Smartphone, a significant increase of the export control authority, which could anger U.S. allies around the world.

The Commerce Department declined to comment on the proposal.

However, a Trade spokesperson, said that the recent US-against Huawei, including one of conspiracy to steal trade secrets, “confirms the need for caution when considering licence applications. In the US, there are still major concerns about Huawei.”

Huawei and TSMC did not respond to requests for comment.

The United States has placed the Smartphone on a “black list” in May of last year, citing national security concerns. That’s forced some U.S. and foreign companies, in order to seek a special license from the us Department of Commerce, and to sell it, but for the China hawks in the US administration have been frustrated due to the large number of supply chains, beyond their reach.

The others are in the Trump administration’s fear of antagonizing Beijing, which has just signed a trade deal with Washington. They are also concerned that the restrictions and limitations of the innovation in the offshore, and take advantage of foreign competitors.

Most of the chip manufacturers have to rely on equipment produced by AMERICAN companies such as KLA (KLAC.Oh, Lam Research (LRCX.(O) and Applied Materials (AMAT.(O), according to a report last year by China Everbright Securities.

“There is no production line in China, which are used only in equipment made in China, so it is very difficult to get chips without the US equipment,” Everbright book.

Additional Reporting by Stephen Nellis; Writing by Alexandra Alper; editing by Gary McWilliams and Sonya Hepinstall

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