TSMC Won’t Sell Chips to Huawei in Fourth Quarter

What’s new: Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, will be unable to supply chips to China’s Huawei Technologies Co. Ltd. in the fourth quarter as a result of the U.S. ban, the company said Thursday.

TSMC President Wei Zhejia declined to comment on recent reports that the company obtained a permit from the U.S. government for a limited supply to Huawei, which is under sanctions imposed by the Trump administration.

TSMC stopped shipments to Huawei Sept. 15 in compliance with the ban from the U.S. Department of Commerce, Wei said.

The Commerce Department in May restricted global chipmakers that use U.S. technology from supplying semiconductors to Huawei. The grace period for the restrictions ended mid-September.

The background: Washington has been imposing sanctions on Huawei since May 2019, first blocking the company from its U.S. suppliers after determining it illegally sold American products to Iran in violation of U.S. sanctions. Since then, the U.S. has taken similar actions to bar Huawei from its non-American suppliers, including TSMC, by threatening to cut off those companies from their U.S. partners.

Before the U.S. sanctions, Huawei was TSMC’s second-largest client, using its computer chips for Huawei’s high-end smartphones, base stations and servers.

Analysts said TSMC was able to offset its Huawei sales losses by reallocating production to other clients. Apple Inc.’s newly released iPhone 12 uses a TSMC-made A14 chip.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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