Report: TSMC secures license to sell older chips to Huawei

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Report: TSMC ready to start volume production of Apple A13 chip.
Image: TSMC

Taiwanese Semiconductor Manufacturing Company (TSMC) has reportedly secured a license from the U.S. Department of Commerce to sell semiconductors to Huawei. However, the company has only been authorized to sell “mature process” products to the Chinese telecom.

Phone Arena notes 28nm nodes and higher are considered mature enough to meet Washington’s criteria. Currently, TSMC is capable of mass-producing electronic components made with 5nm wafers.

Last month, the U.S. government instituted new policies restricting the sale of certain American derived technologies to Huawei.

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A Positive Development for TSMC

TSMC is the world’s most advanced semiconductor manufacturer, but it still could benefit from providing Huawei with older components.

At present, the chipmaker is in the midst of building cutting-edge production facilities in its home country and abroad. But to remain profitable, the firm needs to operate its older fabs at near capacity on a continuous basis.

If TSMC inks an agreement to supply Huawei with older parts, it could keep its three aging GIGAFAB complexes humming.

In addition, the contract manufacturer’s adherence to U.S. regulations and business dealings with a Chinese corporation would affirm its neutrality in the Sino-American trade war.

A Mixed Bag for Huawei

On the one hand, TSMC securing a U.S. export control exemption is not the best news for Huawei. The telecom’s inability to procure cutting-edge processors means it cannot revive its smartphone business.

In Q2, Huawei sold enough handsets to unseat Samsung as the world’s largest mobile phone company. But the U.S. government’s new trade restrictions have curtailed its ability to securing advanced semiconductor products. Phone Arena estimates the firm will burn through its inventory of 5nm processors within six months.

Once that happens, Huawei will no longer manufacture the high-performance smartphones that make it a global player.

That said, the company has strived to diversify its offerings following its loss of access to certain American technologies. The conglomerate is working with leading Chinese automakers to develop 5G-enabled smart cars. The firm is also working to build Russia’s cloud infrastructure and designing a desktop computer product.

Most importantly, the telecom has lucrative contracts to establish fifth-generation mobile data networks across the world.

Huawei has also made some headway in regaining access to American-made technology. Intel and Advanced Micro Devices (AMD) secured trade licenses to sell the firm select semiconductor products. With TSMC returning as one of its vendors, the telecom could, theoretically, acquire the components necessary to grow its non-smartphone segments.

If the conglomerate succeeds, Huawei will pull off one of the more impressive corporate pivots of the 21st century.

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