Huawei, after being plagued by U.S. sanctions for two and a half years, has seen its chipmaker also in distress—not only has its high-end chip production has been halted, but also shipments of its mobile application processors (AP) have shrunk.
The report said that the global smartphone AP market grew 17 percent to $8.3 billion in the third quarter of 2021, with Qualcomm, Apple, MediaTek, Samsung LSI, and Unisoc taking the top five portions.
The United States also banned Huawei from importing U.S. products with more than 25 percent technology content.
However, TSMC said on May 23, 2019, the products they offered to Huawei comes from U.S. technology, but do not meet the 25 percent technology content so they would continue to supply chips to Huawei.
In May 2020, the U.S. Department of Commerce offered new regulations requiring that any chip produced using U.S. technology and equipment first be approved by the United States before it can be sold to Huawei.
Most of the chip fabs worldwide, including leading Chinese foundry SMIC and Taiwan’s TSMC, purchase equipment from U.S. companies like Applied Materials, Lam Research, and KLA.
TSMC revealed to the public on July 16, 2020 that it had stopped accepting orders from Huawei from May 15 due to the impact of the U.S. ban on Huawei.
Huawei’s 5 nanometer Kirin 9000 chip is made possible by Dutch company ASML, which owns the lithography that enables the mass production of 5nm-level chips. But ASML, with its financial and technical links to the United States, is restricted—and by extension all companies that use its lithography machines are as well—by the U.S. ban.
In addition to the restrictions on chip foundry production, Huawei’s HiSilicon chip design arm has also been cut back. Because chip design requires the use of electronic design automation (EDA) tools, the sector has been dominated by U.S. companies such as Synopsys, Cadence, Mentor Graphics, and Ansys, which control 90 percent of the global market for EDA tools.
Since the U.S. sanctions order required that all foundries end production of chips for Huawei in September 2020, Huawei has been running out of high-end chips.
China’s Shenzhen city, where Huawei is based, in 2021 fell from the No. 1 spot to No. 3 in the ranking of China’s largest chip design industry cities, with annual sales plummeting from 130 billion yuan ($20.38 billion) to 69.7 billion yuan ($10.93 billion).