The walls are seemingly closing in on Huawei as the beleaguered Chinese company continues to lose suppliers and potential reprieves in light of the US’ increasing export restrictions against it. Next week will see the implementation of new rules that would prevent Huawei from having access even to semiconductors and materials needed to manufacture its products and it seems that South Korean companies Samsung and SK Hynix are among those withdrawing their products from a lucrative customer.
Last May, the US Commerce Department added a new thorn in Huawei’s side. It declared it illegal for semiconductor manufacturers that use US technologies or products from selling its products to Huawei or its affiliates like HiSilicon without a license. The US has so far not granted any kind of license allowing business with Huawei.
The new rule was primarily meant to curb Huawei’s ability to make its own Kirin processors in order to replace Qualcomm’s Snapdragons but the restriction might actually apply to any semiconductor. That seems to be the interpretation that Samsung and SK Hynix are taking, both of which supply Huawei with DRAM or memory chips rather than processors. The two companies are reported to cut business ties with Huawei when the new rule takes effect next week.
This blow comes on the heels of another report that suggests the US will be tightening its grip even further. The US Department of Defense has reportedly suggested adding SMIC, China’s biggest semiconductor foundry, on the country’s entity list, blocking SMIC from getting access to US technologies, products, and software. This, in turn, could cripple many Chinese companies relying on its silicon, including Huawei.
These restrictions will, of course, also deal a blow to Samsung and SK Hynix, both of whom will be losing a high-paying customer. That said, Samsung also stands to benefit from the situation as the world’s second-biggest phone maker is in danger of being pushed out of the market.