According to TSMC Chairman, Mark Liu, in compliance with the new U.S. regulations, the company has not received any orders from Huawei since May 15. This is about two months ago. He further stated that it will also stop supplying Huawei by September 14. This is if the situation does not change and the 120-days grace period expires.
Furthermore, he revealed that “standard products” are not included in the discontinued products. However, he did not really explain what he means by “standard products”. There are speculations that “standard product” may refer to a chip not designed by Huawei Hisilicon. That is other mid-range chip products whose design is from companies like Qualcomm and MediaTek.
In recent years, Huawei phone shipments have continued to grow and it is TSMC’s second-largest customer after Apple. For most people, TSMC and Huawei are close partners. This means that their non-cooperation will be a huge loss for both companies.
There were reports that TSMC recently sent a letter to the U.S. urging the government to allow it to supply Huawei after the grace period. The company has since denied this report and it claims to be stable even without Huawei. Contrary to speculations, TSMC did not lose 14% of its revenue. Instead, in Q2 2020, it recorded a 28.9% year-on-year increase in revenue.
According to TSMC vice president and CFO Wendell Huang, business was flat in the second quarter. This is primarily due to the deployment of 5G infrastructure which is offsetting declining growth on other platforms.
For the third quarter, MediaTek placed three additional orders with TSMC, and TSMC is also working on a 5nm A14 for Apple. Apple’s own Arm architecture chip for Mac computers also needs TSMC’s advanced process. This technically means that TSMC may have filled the vacuum Huawei left. Furthermore, TSMC remains optimistic about its future revenue. According to its forecasts, it is expecting $11.2 billion to $11.5 billion for Q3 2020.
Huawei has its plans for life without TSMC
In the face of TSMC’s cut-off, Huawei has its own preparations and plans. In March, Huawei rotating CEO, Xu Zhijun, had publicly stated at Huawei’s earnings meeting that if the United States prohibits chip makers from using American equipment, materials, and software to manufacture chips designed by HiSilicon, Huawei can also buy chips from Samsung, MediaTek, as well as Ziguang Zhanrui and other companies.