ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Technology

Huawei floats buying chips from Samsung to fight US crackdown

Chinese tech giant faces sharply slowing sales amid coronavirus

Huawei has explored alternative suppliers in response to U.S. pressure on its high-tech supply chain.   © Reuters

TAIPEI -- Huawei Technologies, the world's biggest telecom gear provider, has insisted it could buy chips from Samsung Electronics and other companies if the U.S. government tightens export controls as part of a further crackdown on the Chinese group.

"Even if the U.S. does take such measures, we could still buy chips from Samsung in South Korea, MediaTek in Taiwan and Spreadtrum within China's mainland. This is common industry practice," a Huawei spokesperson said on Tuesday.

"Even if we cannot make these chips ourselves, I believe that many chip companies in China will grow, and we could then make our products using chips from these companies, as well as those from South Korea, Japan, Taiwan and Europe."

Washington has blacklisted Huawei, also the world's second-largest smartphone maker, and is considering further curbs on access to U.S. technologies for its suppliers.

Huawei currently relies on Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker, to produce all kinds of high-end chips -- from mobile processors, networking processors and 5G modems to other customized chips for its smartphones, servers, telecom equipment and most of its hardware lineup.

If the U.S. does enact new export rules, Samsung, MediaTek and other foreign chip suppliers, which use a lot of American technologies and tools in chip development, would have to comply with the regulations, casting doubt on how Huawei would be able to purchase from them.

Samsung is the world's biggest smartphone maker as well as the world's largest memory chipmaker. It is also a dominant supplier of advanced OLED screens that most high-end smartphones adopt. The South Korean company is also expanding its foundry business, manufacturing chips for others, to compete against TSMC, which controls more than 50% of the global market.

"Huawei has and will continue to adhere to a long-term multi-sourcing and multi-channel procurement strategy," the Huawei spokesperson said. "We do not rely on any single country or supplier."

Huawei's remarks regarding supply chain diversification came after TSMC last week for the first time publicly said it was actively evaluating the cost of building an advanced chip factory in the U.S., a major change of tone compared with last year.

Washington has suggested the Taiwanese chipmaker build chips in the U.S. for national security reasons, the Nikkei Asian Review has reported.

Huawei also has switched some mid- to low-end chip orders to Semiconductor Manufacturing International Co., China's top contract chipmaker and a small rival to TSMC, sources told the Nikkei Asian Review.

Huawei on Tuesday reported revenue of 182.2 billion yuan ($25.7 billion) in the January-March period, increasing only 1.4% year-over-year. It is a significant slowdown in growth compared with the 39% it recorded for the same period last year and shows weakening demand amid the coronavirus outbreak.

The company's profit margin was 7.3%, slightly lower than the 8% for the same period in 2019.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more