Huawei will no longer produce its flagship chipsets due to US sanctions

Washington's restrictions will force Chinese tech giant Huawei to stop making the chipsets powering its flagship smartphones as soon as next month, the company has revealed.


According to Richard Yu Chengdong, CEO of Huawei’s consumer business, the new high-end Mate40 will become the last model featuring its most advanced processor Kirin 9000. The new smartphone is set to be released in September.

“Our mobile phone business is having a hard time, as the supply of chips is difficult and Huawei is out of stock,” he said as cited by Chinese media at a tech summit on Friday. “After Sept. 15, we will neither be able to produce our flagship chipsets, nor our chips with AI processing capabilities – this is a huge loss to us.”

The advanced chipsets were manufactured by Taiwan Semiconductor Manufacturing, or TSMC, one of the world's largest semiconductor foundry companies. The supplier stopped taking orders from Huawei in May as it caved in to US sanctions pressure. 

Huawei has long been in the crosshairs of the trade war between the world’s two biggest economies. Last year, the Chinese telecom equipment maker, labeled by the US a security threat, was added to the infamous Entity List that barred American businesses from dealing with it without special permission. 

US sanctions are set to have an impact on the whole company’s performance this year, with Yu predicting that 2020 smartphone shipments will be less than the 240 million units it shipped in 2019. According to the results of the previous quarter, Huawei surpassed Samsung for the first time to become the world’s largest mobile phone vendor.

“Had it not been for the US restrictions, Huawei would have surpassed Samsung in mobile phone shipments last year,” the official noted.

While the US government previously granted waivers allowing certain US companies to continue selling to Huawei, it intensified pressure on the firm in May. Back then, the Department of Commerce introduced a new punitive measure which requires any foreign manufacturers using US chip-making equipment to get a license before they are allowed to sell semiconductors to Huawei – and this is what has deprived the company of its most advanced in-house chipsets.

Earlier this year, Chinese state media reported that Beijing could retaliate against Washington's crackdown on its companies. The reports said the government may target such prized American firms as Apple and Boeing, which enjoy huge benefits from the Chinese market. 

Before the most recent US sanctions against Huawei were announced, the tech giant said it could switch to other producers, such as Samsung. It also eyed domestic chip production using Semiconductor Manufacturing International Co., China's top mainland contract chipmaker. However, the company lags behind its Taiwanese rival as it makes less advanced processors.

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