Sony and Kioxia ask US Commerce Department for Huawei trade licenses

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Huawei first quarter results, 2020.

Sony Corporation and Kioxia Holdings Corp. reportedly asked the U.S. Department of Commerce for approval to sell products to Huawei. The government agency announced it would sanction companies selling American derived semiconductor technology to the Chinese conglomerate after September 15.

Advanced Micro Devices (AMD) applied for a trade license last month and recently confirmed the Commerce Department approved its request.

Sony and Kioxia Trade License Request Details

According to Nikkei Asia, Sony and Kioxia asked the U.S. government for dispensation from its new trade rules out of concern for their profits. Before the Commerce Department implemented its recent export controls, both firms made significant revenue from selling semiconductors to Huawei.

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Sony reportedly has sold the Chinese telecom $1.9 billion worth of image sensors every year, one-fifth of the segment’s total yearly sales. In August, the Japanese conglomerate reported the division’s revenue dropped 45 percent due to the weak smartphone market.

Therefore, Sony cannot afford to lose its biggest image sensor customer behind Apple.

Huawei also represented a significant chunk of Kioxia’s revenue before the trade ban came into effect. The Japanese corporation makes roughly 40 percent of its annual income from selling smartphone flash memory chips. As the Sino conglomerate served as its second-largest customer, the chipmaker is facing a considerable drop in income.

In fact, Kioxia may have decided to delay its planned multibillion-dollar initial public offering because it lost Huawei’s business.

Research company Omdia estimates Huawei previously purchased $26.4 billion in electronics components from Japanese, South Korean, and Taiwanese firms. Because of the amount of revenue involved, other chipmakers from those regions will likely make trade ban appeals of their own soon.

AMD Secured a Huawei Trade License

Although the U.S. Commerce Department has a long-standing conflict with Huawei, it is not opposed to granting exemptions to its export controls.

Last month, Intel Corporation secured a license to sell Huawei select semiconductor products. GizChina reports AMD has also received the agency’s approval to resume trading with the telecom. At present, neither American company has specified what kind of products it is cleared to sell Huawei.

While the Sino conglomerate made billions of dollars from its smartphone business, it has other interests. Since losing access to US-made semiconductors, the firm has pivoted to focusing on its 5G networking gear business. It has also directed resources to creating a desktop personal computer offering and crafting a multifaceted smart car platform.

Intel and AMD could be supplying Huawei with components related to those three segments.

Regardless, the Commerce Department is willing to work with chipmakers that want to trade with Huawei under certain circumstances. That means Sony, Kioxia, and other companies that have applied for licenses could resume their lucrative business relationships with the Chinese corporation.

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