The drama between the U.S. government and Huawei is unending. Following last week’s racketeering charges against the company and its CFO, Reuters is reporting that the U.S. Government may force foreign chip manufacturers, including companies like TSMC, to seek a U.S. License before doing business with Huawei. In effect, this would allow the U.S. to block the shipment of phone-critical components to Huawei.
Neither the U.S. Commerce Department, TSMC, or Huawei provided meaningful comments to Reuters regarding its story.
Even if a U.S.-based company isn’t involved in the chain between chipset manufacturers and Huawei, a change in the government’s policy via the “Foreign Direct Product Rule” could indirectly place enough pressure to halt sales. Many chipset fabs and assembly lines use equipment that can be traced back to U.S. companies, and the proposed change would require such companies seek a U.S. license before supplying resulting products to Huawei. Of course, foreign companies don’t have to oblige that change, but they would implicitly risk their own sales bans and further retaliation from the U.S. government if they don’t — giants like TSMC can hardly risk that.
The new restrictions have allegedly been drafted, but it’s uncertain if they will be approved, and the move, which could be seen as infringing upon sovereign business outside the U.S. purview, could anger not just foreign companies, but foreign governments as well:
“Under the draft proposal, the U.S. government would force foreign companies that use U.S. chipmaking equipment to seek a U.S. license before supplying Huawei – a major expansion of export control authority that could anger U.S. allies worldwide.”
There wouldn’t be much of a workaround, either. Although Huawei can circumvent U.S. products directly in its supply chain, if all the world’s largest chipset manufacturers cut the company off, even the supply of its own HiSilicon Kirin chipsets (currently produced by TSMC) would be affected.
For more information, click through to Reuters’ original reporting on the subject just below.
Plan nears approval
According to another more recent follow-up report by Reuters, senior officials in the US government have approved of the plan, with the decision being made on Wednesday (March 25th). If and when it goes into effect, it could seriously impact Huawei’s ability to manufacture smartphone chipsets and ASICs through manufacturers like TSMC.
Though some speculate it might harm US companies more than Huawei once it can find alternatives (assuming it can), one of Reuters’ sources claims the government has “gone to great lengths to ensure impacts on U.S. industry will be minimal.”