Friday, 17 July 2020 08:22

TSMC says it has stopped processing new semiconductor orders for Huawei Featured

TSMC says it has stopped processing new semiconductor orders for Huawei Pixabay

Taiwanese semiconductor firm Taiwan Semiconductor Manufacturing Company says it has stopped processing orders from Chinese telecommunications equipment vendor Huawei Technologies following the US imposition of restrictions in May that make it illegal to supply product to a company that is on an American blacklist unless it obtains a licence.

The company, however, said on Thursday that it would still be possible to achieve more than 20% growth in revenue this year due to the demand for 5G smartphones, the Nikkei Asian Review reported.

In May, TSMC announced that it would be setting up a manufacturing unit in Arizona, just a day before the US announced its additional strictures on Huawei.

The restrictions are changes in the US Foreign Direct Product Rule which places some goods made abroad under US regulations if they are based on American technology or software, or made using American equipment. This is aimed at blocking TSMC from supplying Huawei.

Until now, Huawei, which was placed on a US blacklist a year ago, was obtaining American products from branches of US companies outside the country, using the loophole that allowed it to buy any product which has less than 25% of American-produced content.

TSMC has apparently been cajoled into opening operations in the US because Washington wants to have both advanced chip manufacturers — Samsung and TSMC — making semiconductors in the US to avoid any possible supply chain issues down the line.

The company said on Thursday it was increasing its spending despite the ongoing pandemic.

"We are complying fully with the new [US] regulations. We did not take any new orders [from Huawei] since 15 May," TSMC chairman Mark Liu told an investors conference, confirming an earlier report by the Nikkei Asian Review.

"Although the regulation just finished its public comment period, the BIS [Bureau of Industry and Security] did not make a final ruling change. Under this circumstance, we do not plan to ship wafers [to Huawei] after 14 September."

He did not say whether TSMC planned to apply for permits to ship to Huawei. A TSMC spokesperson said his comment was based on existing regulations, and it was not clear whether there would be any further regulation changes from the US government, given that the comment period just ended a few days ago.

Some companies applied for, and obtained, exemptions from the blacklist ruling of 2019 and continue to ship product to Huawei, one of these being Microsoft which obtained a waiver in November last year to ship its Windows operating system to the Chinese firm for use on its laptops.

But Google, which was blocked from supplying Huawei with the proprietary version of its Android mobile operating system, has not been successful in obtaining a waiver from the US Government, though it did make an application. Huawei now uses the open-source version of Android and has added its own apps to try and make up for the functionality missing due to the absence of YouTube, Google Maps, Drive, Gmail, Duo, Photos, and YTMusic.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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