South Korean chipmakers Samsung Electronics Co. and SK hynix Inc. are anticipated to discontinue providing memory chips to Huawei following hardened U.S. sanctions against the Chinese electronics company next week. Samsung Display and LG Display are also expected to stop supplying panels to the China-based company.
The new trade sanctions set by the U.S. forbid the use of U.S. technology by Huawei, either directly or indirectly.
U.S. Secretary of State, Mike Pompeo, stated that Washington persuades its partner countries to unite with the anti-Huawei campaign of the U.S. Pompeo said that the State Department upholds the Commerce Department’s expansion of the Foreign Direct Product Rule. The rule prevents Huawei from avoiding U.S. law through an alternative chip and off-the-shelf (OTS) chips manufactured with U.S. tools.
The Commerce Department also identified 38 Huawei associates forbidden from receiving sensitive technologies while Huawei’s Temporary General License nears expiration.
The companies would cease to supply Huawei starting on the day of implementing the new trade restrictions on September 15.
The U.S. banned display driver integrated circuits, which prompted manufacturers like Samsung and LG to stop selling OLED panels to Huawei.
Samsung could not settle client-related concerns in response to the prospect of cutting off the Chinese tech company; a position also echoed by SK.
Industry Restructuring
The prohibitions could restructure the industry as Samsung Display and LG Display might clear their inventories below market value. An LG official stated that the situation would seriously affect panel prices since Huawei uses premium displays from Samsung and LG.
Samsung Display and LG Display utilize American software and equipment from Applied Materials and Lam Research for shipbuilding.
Banned microchips include a mobile dynamic random-access memory chip, a microchip used for panel screens, Low Power DDR4, embedded multi-media controller, a type of flash storage, and a display driver integrated circuit.
A source from the display industry told that Huawei’s contribution to sales comprises only a small percentage. Huawei buys most of its panels from Chinese supplier BOE.
Huawei does not affect local display manufacturers that much. Also, the sales from Chinese companies account for less than one percent for LG Display.
