Taiwan Semiconductor Manufacturing (TSMC) has stopped taking new orders from Huawei, the Nikkei Asian Review reported, with sources saying the move comes after the US government confirmed its intent to restrict the Chinese’s company’s use of US tech and software for the design and manufacture of its semiconductors abroad. The sources said company is halting new orders to comply with the latest export control regulation, but that orders already in production, and those taken before the new ban, will continue, as long as the chips can be shipped before mid-September.
"It's a difficult decision for TSMC as Huawei is the company's No. 2 customer, but the chipmaker has to follow the US rules," a source familiar with the matter said.
The Nikkei noted that Huawei relies heavily on TSMC to manufacture its advanced chip designs. TSMC also produces artificial intelligence processors and networking chips for Huawei. The latest US rule came on the same day the Taiwanese company said it would invest USD 12 billlion ionto building a 5 nanometer chip factory in Arizona.
China's Department of Commerce said on 17 May that it strongly objects to the tighter US export controls and said such restrictions pose a huge threat to the global supply chain. The department demanded that Washington reverse the new restrictions and warned China would take necessary countermeasures if it did not. Huawei meanwhile said it will release a statement addressing the US ban at the opening of its annual analysts summit on 18 May.
The new restrictions are specially designed to target Huawei's contract chipmaking suppliers, which receive chip designs from the company's chip design arm HiSilicon Technologies and put them into production. These include TSMC, Chinese chipmaker Semiconductor Manufacturing International and Win Semiconductors, a manufacturer of radio frequency chip manufacturer. Win's support is crucial for Huawei to cut its reliance on US suppliers Skyworks and Qorvo, a legal expert said.Huawei is TSMC's second-largest client only after Apple, accounting for 15-20 percent of annual revenues. Huawei also accounted for up to 20 percent of SMIC's revenue, according to a Bernstein Research estimate.
