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US Blacklisting Of Huawei To Benefit Taiwanese Chip Maker TSMC


06/05/2019


US Blacklisting Of Huawei To Benefit Taiwanese Chip Maker TSMC
Ignoring the blacklisting by the United States of the Chinese etch company Hiawei, the Taiwan Semiconductor Manufacturing Company (TSMC) will continue to supply chips to Huawei Technologies. TSMC is the largest contract chip maker of the world and analysts expect that this decision would help the company to make short term but significant gains.
 
Despite the blacklisting of the mainland Chinese telecoms giant Huawie by the US in its efforts to deny access to American goods and technology for the Chinese company, TSMC reiterated on Tuesday that its shipment to Huawei “abide by the rules”. Many analysts see the action of the US against Huawei to be part of the ongoing trade war with China.
 
According to industry analysts, it would be possible for TSMC to achieve its revenue forecast second quarter of $7.6 billion, an increase of about 7 per cent from the previous quarter, by simply satisfying the sharp increase in the demand for ships from HiSilicon Technologies – which is the chip design subsidiary company of Huawei. Advanced 7-nanometre chips is supplied by the Taiwanese company to HiSilicon.
 
However there are other analysts who say that whether the decision of TSMC to continue to do business with Huawei is taken up by the US would determine the actual performance of the Taiwanese company in the second quarter. This is because the blacklisting of Huawei by the US not only impacts American suppliers of the Chinese tech giant but also includes third-country suppliers. The success of TSMC would also be dependent on the ability of Huawei to source its key components from other suppliers.
 
“TSMC’s continued supply to HiSilicon and its advanced technology in mass-producing 7- and 5-nanometre products are the major reasons it could maintain an unchanged revenue forecast in the second quarter,” analysts from Capital Investment Management Corp said in a note.
 
About 11 per cent of the total revenue of TSMC in the first two quarters of this year is accounted for by Huawei according to Taiwanese media reports. Huawei is also amongst the top three clients of the Taiwanese company. Huawei’s home-grown Kirin processors for its smartphones make use of the chips supplied by the Taiwanese firm.
 
 “But the Huawei case is not a short-term issue,” the analysts said and added that there could be other problems in the near future that could impact profits of TSMC. Such possibilities include the slowing down of sale of Apple products by consumers in mainland China because of the Huawei issue which would mean that TSMC – which is an important supplier for both the companies, could see a slowdown of orders from those companies that assemble and make products for iPhones over the Taiwan Strait.
 
Its decision to continue supplying chips to Huawei did not contravene the ban, the Taiwanese semiconductor firm on Tuesday. “TSMC has comprehensive rules governing compliance management and due diligence for its shipments,” said spokeswoman Elizabeth Sun who also added that prior to making the decision, the company had carefully evaluated the procedures.
 
(Source:www.scmp.com)