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Huawei crackdown

Sony receives US license to supply Huawei with key image sensors

China's Omnivision also gets permit but smartphone maker's supply woes not over

Sony's key image sensor segment has been hit by U.S. restrictions on supplying Huawei Technologies.   © Reuters

TAIPEI/TOKYO -- Sony and Omnivision, the world's two leading camera imaging sensor providers, have been granted licenses by the U.S. government to resume some shipments to China's embattled Huawei Technologies, which was cut off from vital global chip supplies by Washington's crackdown, multiple sources familiar with the matter told Nikkei Asia.

Sony, also a supplier to Apple, is the exclusive provider of the premium CMOS image sensor chips that have enabled Huawei to introduce world-class cameras capable of competing with industry-leading rivals such as the iPhone.

Since Sept. 15, global suppliers have been required to obtain a license if they use any American technology to supply the Chinese company.

Huawei's new Mate 40 series, unveiled just last week, still uses Sony's image sensors, giving them the world's most advanced and powerful camera systems, according to the Chinese company.

Omnivision, acquired by a Chinese fund back in 2014 and now a subsidiary of Shanghai-listed Will Semiconductor, is also a key Apple, Oppo and Xiaomi supplier. It is the world's third-largest CMOS image sensor player after Sony and Samsung.

"What we learned was that some display-related and image sensor related suppliers are receiving some licenses from the U.S. government as those components are viewed as less related to cybersecurity concerns, and Sony is among those who received approval," a chip industry executive told Nikkei Asia.

Despite receiving a license, however, Sony remains cautious about the future of its business with Huawei, a source close to the Japanese company told Nikkei, as the Chinese telecoms company still needs to secure reliable sources for many other chips and components for its smartphone business.

Samsung Display, the most important smartphone display supplier to Huawei, which provides organic light-emitting diode displays for its premium phones, also received the greenlight to continue its business with the Chinese tech giant. The South Korean display maker's parent, Samsung Electronics, and memory chip supplier SK Hynix, however, have not yet received the U.S. approvals, Nikkei Asia reported.

Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker and a vital supplier to Huawei, on Oct. 15 declined to comment whether it has applied for a license to ship to Huawei, but it said it has not made any shipment to the Chinese company since Sept. 15 in compliance with the U.S. regulations and would not ship anything to Huawei for the October-December period.

The latest development is a bright spot for Huawei's flagship handset business, which contributed more than 50% of the company's total revenue in 2019. Huawei has been stockpiling all kinds of components, parts and materials for smartphone production, and even prepared warehouses specifically to house those inventories, in order to sustain its operations. Nevertheless, the smartphone business is more vulnerable to the U.S. crackdown than Huawei's carrier and enterprise businesses, due to the complicated processes and massive amounts of components required to make a smartphone, a Huawei executive told Nikkei Asia in an interview.

Huawei last week launched its latest 5G flagship smartphones, the Mate 40 series, which are powered by the company's self-designed Kirin mobile processor series. The Mate 40 lineup is Huawei's answer to Apple's 5G iPhone 12 range. In terms of technology, the Mate 40 phones pose a strong challenge, but supply continuity remains the Chinese tech giant's biggest concern.

The U.S. greenlights for Sony, Omnivision and Samsung Display come a month after American PC processor giants Intel and AMD confirmed that they have resumed undisclosed product shipments to Huawei. Earlier in September, Huawei unveiled two new notebook computers powered by Intel and AMD's CPUs, respectively.

However, Huawei's mobile chip suppliers Qualcomm and MediaTek, which also have applied for approvals for mobile processors -- the heart and brains of smartphones -- have not yet obtained licenses, people familiar with the matter said. So although Huawei can receive supplies from Samsung Display, Sony and Omnivision, without access to mobile processors and a wide range of other components and parts, the Chinese company will struggle to keep its smartphone business on track.

Huawei last week reported a significant slowdown in growth, with its revenue for the first nine months of this year expanding only 9.9% to 671.3 billion yuan, compared with a robust growth of 24.4% over the same period of time last year. The Chinese company said the earnings results met its expectation, but it warned there could be bigger woes ahead.

Sony declined to comment on specific clients. Omnivision did not respond to Nikkei's request for comment as of publication.

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