Huawei Stockpiling Chip Inventories Before US Ban Takes Effect on Sept. 15

Huawei’s HiSilicon has chartered a cargo plane to ship Kirin and other related chips from Taiwan to mainland China as a measure to race against the clock before the latest US ban takes effect on Sept. 15, which demands chipmakers across the globe stop supplying semiconductors to Huawei.

The US ban demands manufacturers that contain US technologies in their products to cut ties with Huawei. A license from the U.S. Commerce Department is required if these companies want to remain business partners with Huawei. Without the prospect of a time extension or a mitigation of the ban, the Chinese tech giant’s unprecedented costly action indicates that it is preparing for the worst.

Taiwan-based Taiwan Semiconductor Manufacturing Co (TSMC), Huawei’s Kirin 9000 chip supplier, has reportedly been working non-stop to produce chips for the Chinese tech champion before it has to comply with the US sanctions. 

Veteran high-tech observer Haifeng Huang said in a media interview that Huawei has about 10 million available Kirin 9000 chips on hand, which means that there will be about 10 million Mate 40/Pro smartphones installed with the chip. Huang said the chips will run out quickly and might only sustain the manufacturing line for about six months, after which Huawei’s smartphone lines will be faced with serious challenges. Due to the limitations of suppliers, the market has speculated that the soon-to-be launched Mate 40 series is expected to be Huawei’s last smartphone to carry Kirin chips.

The US sanction also affects South Korean manufacturers such as Samsung, SK Hynix and LG who will not be able to continue any deals with Huawei after Sept. 15. 

Samsung and SK Hynix, two of the biggest chip manufacturers in South Korea, will stop selling parts to Huawei on Sept. 15, according to a South Korean media report. Samsung and LG Display will also stop supplying high-end smartphone panels to Huawei Technologies Co. due to US restrictions.

As the US government cracks down on the Chinese tech leader, its South Korean partners are taking a big hit. According to media reports, Huawei made up 3.2% of Samsung’s sales last year and 11.4% of SK Hynix’s. The decrease in exports will result in price drops and the semiconductor industry in South Korea will take a huge blow. 

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Despite Huawei’s uncertain fate against the incessant clampdowns from the U.S. government, it has put on a good fight and has shown victories in sales and innovations. During the pandemic, Huawei overtook Samsung to become the world’s biggest smartphone seller, and it announced that its own HarmonyOS 2.0 would be put to use next year, creating a comprehensive ecosystem for Huawei’s software and equipment.

“Chips involves intricate technologies, and Huawei undoubtedly has difficulties in regard to its manufacturing,” Chenglu Wang, president of Huawei’s software department said earlier this month during the Huawei Developer Conference 2020. He said the imposed limitations have also prompted Chinese companies to sober up and reflect on the realities that sometimes dangers bring opportunities.