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Huawei is running out of chips thanks to US sanctions

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Huawei might have surprised when it became the biggest smartphone manufacturer in the world even after US sanctions prevented them from doing business in a lucrative territory, but it appears that the ban is starting to have a bigger impact in other ways as the company is running out of processor chips for its devices.

The Associated Press has reported that Huawei will no longer be able to make its own Kirin chipsets, due to the ongoing economic pressure from the US. Following the ban on the company working with US software companies – like Google’s app store –  the US Commerce Department issued an amended export rule to block shipments of semiconductors to Huawei in order to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain US software and technology.”

This ruling is preventing the company from taking in any new orders from Taiwan Semiconductor Manufacturing Co. (TSMC), the largest semiconductor manufacturer in the world, as it has reportedly halted orders for Huawei’s HiSilicon unit in May following the new US sanctions. Huawei has already been working on designing its own chipsets, but this delay will ultimately affect their ability to scale out and will mean that they will no longer be using an established and popular chipset.

The ban is also having an impact on the chipset-producing companies and their bottom line, as Huawei is one of their biggest customers. The Wall Street Journal reported Saturday that American chipmaker Qualcomm had asked the Trump administration to ease the restrictions on the sale of components to Huawei, and allow it to sell chips to them for use in their 5G phones.

Last Updated: August 12, 2020

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