Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker, has halted new orders from Huawei Technologies in response to tighter U.S. export controls aimed at further limiting the Chinese company's access to crucial chip supplies, multiple sources told the Nikkei Asian Review. (Nikkei Asian Review, May 18)
Brady Wang's key takeaways:
- We’ll have to wait and see how China could react, but a Global Times editorial stated the following: As part of the countermeasures, China is prepared to put certain US companies on its "unreliable entity list," imposing restrictions on or launching investigations into US companies like Qualcomm, Cisco and Apple in accordance with Chinese laws like the Cybersecurity Review Measures and Anti-monopoly Law, and suspending the purchase of Boeing airplanes, a source close to the Chinese government told the Global Times.
- As for the impact to TSMC business? Short term it should not be significant as the US Bureau of Industry and Security gave enough buffer time for TSMC to clear its WIP inventory. And we believe continued demand from the likes of Xiaomi, Oppo and Vivo will likely fill the gaps.
- Longer term, however, could bring strategic consequences. Shutting out Huawei could hamper the chipmaker’s ability to finance development of new processes (3 and 2 nm), as Huawei has done in the past.