Japanese semiconductor firms making major adjustments following Huawei ban

0
402
Sony IMX500 image sensor.
Image: Sony

Japanese semiconductor companies are making major adjustments following the U.S. Department of Commerce’s issuance of new export controls. As of September 15, even non-American companies are barred from selling electronic components to Huawei if those components contain U.S.-made technology.

However, Japanese semiconductor firms sold an estimated $10.4 billion worth of goods to the Shenzhen, China-based conglomerate last year. As a result, the country’s chipmakers are trying to acquire new clients as quickly as possible.

Immediate Changes

Wary of incurring severe penalties and losing access to mission-critical software and equipment, Japan’s chipmakers are moving quickly to comply with the Commerce Department’s updated trade policies.

Advertisement
Manage your supply chain from home with Sourcengine

However, many of the country’s electronic components vendors are feeling the sting from having to make rapid operational changes.

Sony ended its multibillion-dollar image sensors supply deal with Huawei earlier this week. Last month, the company reduced its fiscal year capital expenditure targets by $470 million to compensate for the lost revenue.

Renesas Electronics, which previously provided Huawei with 5G base station components, also cut ties with its old client. The corporation is currently increasing its marketing outreach to Ericsson and Nokia, two of the world’s leading networking gear providers.

In addition, flash memory vendor Kioxia is working to fill Huawei’s place in its production schedule. The company hopes to re-task its factories to produce smartphone and data center chips for other electronics corporations. The firm likely wants to show its products are in demand ahead of its $3.6 billion initial public offering next month.

Long-Term Adjustments

Amid making a flurry of immediate changes in response to Washington’s new trade rules, Japan semiconductor companies are also making some long-term adjustments.

For instance, Toshiba stopped all of its hard drive and component shipments on September 15. At present, the corporation is evaluating if the Commerce Department’s mandates will impact its in-progress orders. The reason being, the U.S. government stated it would sanction manufacturers found supplying parts to third-party companies that provide Huawei with American electronic components.

Similarly, Sony is considering applying to the U.S. government for a license to do business with its older partner. Recently, Samsung, MediaTek, and the Semiconductor Manufacturing International Corporation (SMIC) asked Washington for trade ban exemptions. However, the PlayStation maker is also looking into expanding its client component base to improve its revenue generation.

Given its massive past capital expenditures, Huawei’s absence from the global component supply chain will impact the sector for years to come. However, it is heartening to see Japan’s semiconductor industry moving with great speed to adapt to change.

The sooner the nation’s chipmakers adjust to recent market changes, the sooner they can return to growth.

LEAVE A REPLY

Please enter your comment!
Please enter your name here