On May 15, the U.S. Department of Commerce announced new export control measures for Huawei and its subsidiaries.
Under the new regulations, Huawei and its affiliates will not be able to design chips using U.S. software and technology, nor will they be able to use U.S. equipment to produce chips. It also means that foundries such as TSMC will not be able to foundry chips for Huawei without a US license.
However, according to media reports, Huawei placed a $700 million wafer order before the new U.S. regulations were announced, but the report said the $700 million wafer was not yet ready for the "wafer star", so TSMC will probably cancel the order. Subsequently, Nikkei News also reported that TSMC has stopped taking new orders from Huawei.
In response, TSMC responded on May 18: has stopped providing new orders to Huawei reports "are purely market rumors".
Although TSMC's response appears to be a "rumor", but strictly speaking, it is not a rumor, only a relay of the fact that there are "rumors that TSMC stopped accepting new orders from Huawei" in the market, neither affirming nor denying the truth of the rumors.
On May 19, in response to TSMC's response, Nikkei's Chinese website, through its WeChat public number, again published an article titled "TSMC needs to suspend acceptance of new orders from Huawei".
The article says: "Various people involved have revealed the news. TSMC must stop taking new orders from Huawei to comply with new U.S. export control laws after the U.S. announced tightened restrictions on the 15th. However, orders accepted before the 15th, or orders that have previously begun production, can be produced and shipped as usual as long as they can be secured by mid-September (120-day period), except that further U.S. approval is required for exports."
In response to an interview with Nikkei News, TSMC responded by not commenting on a single customer, but said it would comply with the law and limit the move.
In response to recent changes in U.S. product export regulations, TSMC will further evaluate export control regulations due to the extremely complex supply chain of the semiconductor industry.
In a previous analysis of the Huawei incident, VeriSilicon also pointed out that TSMC needs to comply with the new U.S. regulations for Huawei, so if TSMC does not obtain a license from the U.S., TSMC will not be able to continue to OEM chips for Huawei.
Although, under the new regulations, foundries such as TSMC, which have started production projects under Huawei's design specifications, do not need to apply for a license from the U.S. as long as those production chips are delivered to Huawei within 120 days of the new regulations officially taking effect.
On the face of it, Huawei will be able to continue to place orders with TSMC for the next 120 days, but it should be noted that this provision states "production projects that have been started according to Huawei's design specifications", which means that the 120-day grace period is for projects that are already in production, and if "production projects that have not been started according to Huawei's design specifications" are obviously not included.
This also means that new orders placed by Huawei after the announcement of the new regulations cannot be produced, even if they were placed before the announcement of the new regulations, but as long as they were not in production at the time of the announcement of the new regulations, they do not count.
As a result, Huawei placed a $700 million wafer order before the new US regulations were announced, as long as the $700 million wafer has not yet been put into production - that is, it is not yet a "production project started according to Huawei's design specifications" and therefore needs to apply for a US license to produce.
Even if orders are placed now, 7nm and 5nm wafers take 120 days from wafer drop to delivery, and apparently the 120-day period given by the US is precisely calculated.
From yesterday's rather vague TSMC response to the rumors, TSMC for whether to accept Huawei's new orders seems to be still pending, may be actively studying countermeasures, may have begun to lobby the U.S. side of the relevant decision-making bodies, while making the corresponding application, in order to obtain the U.S. side issued a "license" to maintain cooperation with Huawei.
However, even TSMC has previously announced that it will spend $12 billion to build a 5nm plant in the United States, to the United States, the U.S. State Department officials still said that the United States did not guarantee the release of export licenses to TSMC. This also means that even if TSMC applies for a license in the US, it probably won't pass.
So TSMC will be hard on the U.S. Department of Commerce's new regulations in order to protect its supply to Huawei? Obviously, this possibility does not exist.
First, Huawei is TSMC's second largest customer, but only contributes about 14% of the revenue, and more of the revenue comes from the US vendors. Would TSMC go to the trouble of offending the U.S. government for this 14% of revenue?
This may make TSMC lose more U.S. customers, after all, there is Samsung behind the rival is eyeing prey, at present Samsung is actively developing foundry business to compete with TSMC, its 5nm is also about to mass production, 3nm also made a breakthrough.
In addition, the current wafer manufacturing link, the United States semiconductor equipment occupies a large market share, TSMC and other foundries can not avoid the United States semiconductor equipment, if TSMC does not implement the new regulations, then the United States can completely sanction TSMC, such as the U.S. semiconductor equipment manufacturers to terminate the TSMC equipment technical support and maintenance, and can even remotely lock the relevant equipment, making TSMC paralysis.
Of course, this is a relatively extreme situation, even if the U.S. government can do so, may not take this step, more will only use this to threaten, after all, a bunch of U.S. semiconductor manufacturers also have to rely on TSMC to OEM chips, even if they can turn single Samsung, it takes time, and Samsung can not undertake so many customers at once.
In any case, if TSMC can't get Huawei, which has a US license, soon, then TSMC will undoubtedly have to suspend taking new orders from Huawei.
This will be an extremely brutal issue for both TSMC and Huawei. Huawei needs to be prepared for the worst and respond in the most positive way.
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