Macronix, Micron, and SK Hynix all recently applied to the U.S. Department of Commerce for licenses to sell electronic components to Huawei. The three chipmakers join MediaTek, Qualcomm, Samsung, and the Semiconductor Manufacturing International Corporation (SMIC) in seeking approval to do business with the Chinese conglomerate.
Before being sanctioned by Washington, Huawei spent billions of dollars purchasing smartphone parts from foreign and domestic firms.
Why American and Non-US Chipmakers Want US Approval to Sell to Huawei
In May 2019, the Commerce Department barred U.S. companies from selling Huawei certain technological products without its approval. Some firms, like Intel and Xilinx, successfully secured licenses to resume trading with the Sino corporation.
However, last week, the government agency tightened its export controls in a way that affected American and foreign semiconductor companies.
The organization’s new rules dictate that firms cannot supply Huawei with electronic components if they contain or were developed using U.S. technology. Because the Commerce Department promised to levy stiff financial penalties on rule violators, American and non-U.S. companies pledged to comply with the new regulations.
For that reason, the Taiwanese Semiconductor Manufacturing Company (TSMC) ended its relationship with its former partner following the policy change.
Nevertheless, several other large component makers have applied to the Commerce Department for exemptions to its Huawei trade ban.
Will Washington Issue New Exemptions to its Huawei Export Ban?
The Commerce Department’s updated policies, which took effect on September 15, gave chip vendors little hope they could reestablish business ties with Huawei.
That said, Washington’s handling of ByteDance’s TikTok suggests there might be a way forward for the world’s leading semiconductor manufacturers.
Initially, the U.S. government sought to ban the popular video-sharing app for operating in the United States altogether. However, ByteDance arranged for Oracle to manage the social media service in America. Though the deal still needs to be finalized, Washington expressed approval for the transaction.
Given that development, it is possible Huawei could strike a similar deal that satisfies the Commerce Department. For instance, a US-based firm like Qualcomm or Micron could assume control over part of the Chinese conglomerate’s chipset manufacturing operations. Admittedly, given the complexities and expenses involved, making such a deal would be highly improbable.
But the ByteDance-Oracle agreement proves Chinese and American companies can conduct massive transactions with Washington’s approval. And where there is room for negotiation, there is the hope of a favorable resolution for all parties.