Huawei has added a large number of orders in advance. The security period can reach the end of this year

 Huawei has added a large number of orders in advance. The security period can reach the end of this year

According to the revised rules, Huawei and all its subsidiaries use the chip products produced by the equipment listed in the U.S. business control list, even if they are produced outside the U.S., they will also be subject to the rules. Whether it is for export, transit trade or domestic delivery to Huawei and its subsidiaries, a license is required.

The above also means that, in addition to TSMC, local wafer foundry and seal testing plants, such as SMIC, Huahong Hongli and Changdian technology, which use a large number of us equipment, cannot deliver products to China without us permission.

However, although the U.S. blockade of Huawei escalated suddenly, it was not a quick fix. Huawei still had a 120 day buffer period. According to the latest export regulations of BIS, Huawei products that have been produced before May 15, 2020 will not be controlled by the new regulations, but these products still need to be exported, transit trade or domestic delivery before September 14, 2020. This is to prevent a direct adverse economic impact on wafer generation plants that use a large number of us devices, BIS said.

For new orders after May 15, even if they can be delivered to Huawei before September 14, they also need to apply to the United States for permission. Given the difficulty of getting permission from the United States, Fabs and seal testing plants will face great risks if they continue to receive new orders from Huawei. Recently, it has been pointed out that TSMC has stopped receiving new orders from Huawei. TSMC did not positively clarify whether the news is true. Some insiders also said that TSMC is still holding a meeting to discuss the matter.

People familiar with the matter told cimicronet that Huawei had predicted that the US would further restrict its chip business, so it had added a large number of orders to suppliers such as TSMC and SMIC in advance. According to different processes, these chips can be delivered in about 2.5-4 months, and can be delivered before September 14, so the short-term impact of management and control upgrade on the company and its suppliers is not obvious.

Previously, industry chain people once disclosed on Weibo that Huawei placed an order with TSMC last week with an amount of US $700 million, mainly using 5nm and 7Nm processes, and these chips will be able to support the corresponding products for about a quarter.

With the localization of Huaweis suppliers, the relationship between SMIC and Hisilicon has become closer in the past year. According to Nikkei, Hisilicons orders now account for 20% of SMICs international revenue. Another industry expert said that Hisilicon has placed an order with SMIC for a total amount of 800 million US dollars, and SMIC is also expanding its capacity. Currently, 6-7 Chengdu is ready for Hisilicon in the capacity expansion plan.

According to the first quarter financial report of SMIC, the companys contract liabilities increased to $195 million from $92.333 million in the fourth quarter of last year, with a growth of 111% on a month basis (contract liabilities refer to the obligations of enterprises to transfer goods due to the consideration received or receivable from customers). It can be seen that SMIC added a large number of orders in the first quarter, most of which may come from Hisilicon.

In addition, a number of small and medium-sized IC design companies also told the collection of microgrids. In March this year, SMIC began to collect all the new orders on the basis of tight production capacity and reduced foam demand, instead of the previous half. In more than five months of this year, we have only arranged dozens of pieces, and the capacity of SMIC international is occupied too much by Hisilicon, said one company

Although the U.S. crackdown on Huawei and its subsidiaries has risen to an unprecedented level, Huaweis short-term operation will not be greatly affected because it has increased orders to TSMC, SMIC and other suppliers ahead of schedule. The real problem Huawei needs to face is that the future of its chip business has been shrouded in dark clouds. If there is no room for easing the US crackdown, only active thinking and change can make Huawei survive.

Source: Wang Fengzhi, editor in charge of jiwei.com_ NT2541