‘TSMC no longer accepts Huawei orders after new trade ban’

‘TSMC no longer accepts Huawei orders after new trade ban’

According to sources Taiwan Semiconductor Manufacturing Company stopped taking new orders from Huawei. This decision comes after the U.S. government introduced strict measures to restrict the Chinese company’s access to American chips.

Several sources have reported this to the Nikkei Asian Review. “TSMC has stopped accepting new Huawei orders because of the newly announced export rules,” said a source familiar with the current situation. “Orders already in production and orders taken by TSMC before the new ban was introduced will not be affected and could continue as long as those chips can be shipped before mid-September”.

According to the confidant, it is a difficult decision for TSMC, as Huawei is the company’s second-largest customer. But “the chipmaker must follow the rules of the United States.” Huawei accounts for 15 to 20 percent of TSMC’s annual revenue.

TMSC is a key supplier to Huawei and is therefore seen as an essential ally of the Chinese company. If the United States would decide to put TSMC on the same list the problems of the chip manufacturer become way worse.

Huawei vs the United States

The U.S. Department of Commerce announced last week that all non-U.S. chip manufacturers using U.S. equipment, intellectual property or design software must apply for a license before shipping chips to Huawei. The new restrictions are aimed to cut Huawei of from getting new chips. These companies, including TSMC, receive designs from Huawei’s HiSilicon Technologies to produce the chips, after which they are shipped back to Huawei.

Since last year’s trade ban, Huawei has been preparing for new steps by the U.S. government to exclude Huawei from the global market further. Sources told Nikkei Asian Review that the telecom manufacturer has been stockpiling resources in order to manufacture chips for network equipment for more than a year.