Samsung, SK Hynix to stop selling components to Huawei: Reports

Huawei’s sourcing options are getting slimmer. China had pushed its local chip company SMIC as an alternative, but it may also get blacklisted by the US.

SK Hynix to cut off chip sales to Huawei (REUTERS)

Samsung and SK Hynix will stop selling components to Huawei following the US sanctions on the Chinese handset company, according to reports.

The US government last month had barred non-US companies from selling components that were built using American technology to Huawei. The sanction is said to be a big jolt to the Chinese handset company which had asserted that it soon would not be able to develop in-house Kirin chipsets.

Richard Yu, president of the company's consumer unit, had described the move as a “very big loss.” He also said that the production of in-house Kirin chips designed by the company's own engineers will stop on September 15.

Production of Kirin chips designed by Huawei's own engineers will stop Sept. 15 because they are made by contractors that need US manufacturing technology, said Richard Yu, president of the company's consumer unit.

With a string of restrictions, Huawei has now very fewer sourcing options. Back in May, Taiwan-based TSMC suspended sales to Huawei.

China, in the meanwhile, has made efforts to push SMIC, a domestic chip company, as the alternate supplier for Huawei, according to TheVerge.

The move, however, is unlikely to help Huawei much as the US administration is considering blacklisting the chipmaker. The company is under investigation over its ties to the Chinese military – an allegation SMIC has refuted.

“Should the US export ban on SMIC materialise, it will signal an escalated attack by the US on China's semi industry and more Chinese companies will likely be included,” analysts led by Edison Lee are quoted as saying. “This is negative not only for China's semi industry but also for semiconductor production equipment (SPE) makers globally, as China could account for 24% of global SPE procurement in 2020.”