After the US government’s restrictions on Huawei were once again upgraded, the share prices of Asian chip manufacturers have plummeted, with MediaTek falling the most. On Monday, the U.S. Secretary of State Mike Pompeo said in a statement that the U.S. Department of Commerce has further tightened restrictions on Huawei’s access to U.S. technology. Furthermore, the U.S. has included Huawei’s 38 subsidiaries in 21 countries in the “entity list”. This means that all chip companies working for Huawei, no matter where they are located, as long as they use American software or equipment will be affected.
According to Pompeo, “The State Department strongly supports the Department of Commerce to expand its foreign direct product rules, which will prevent Huawei from using’alternative chip production’ and providing ready-made products produced with tools obtained from the United States…”
After this report hit the public domain, MediaTek’s stock price fell by a limit of 9.93% on Tuesday. The Taiwanese chipmaker stock hit a new 54% high after its “neutral” rating by Credit Suisse. The shares of Novatek and Realtek Semiconductor also fell by more than 6%. These companies are all alternative routes for Huawei.
In addition, the stock prices of smartphone suppliers Sunny Options, AAC Technology Holdings, and BYD Electronics International have also fallen.
In May of this year, the US Department of Commerce banned all chip sales to Huawei. This law is only active if the chip uses US technology. According to insiders, Huawei will exhaust its inventory of chips in early 2021.
Earlier restrictions require the manufacturer of Huawei HiSilicon chips to obtain a license. At this point, many people believed that Huawei will have to acquire chips from third-party designers like MediaTek. However, the latest restrictions mean that Huawei may not be able to explore this option.
The U.S. decision on Huawei is not a surprise
Jefferies analysts wrote in a report: “The United States is surprisingly blocking the loopholes in its direct product rules. This is not entirely a surprise. This means that Huawei can not rely on third-party chip design companies such as MediaTek and Unisoc to continue to produce mobile phones. The shattered hope also puts Huawei at risk of survival.”
On August 7th, Yu Chengdong said that due to US sanctions, Huawei’s world-leading Kirin series chips cannot be manufactured after September 15th.
Yu Chengdong said that in the past ten years, Huawei’s exploration in the field of chips has changed from seriously backward, relatively backward, leading, to being blocked. “We have invested huge research and development, but unfortunately, in the field of semiconductor manufacturing, Huawei did not participate. We only do chip design, not chip manufacturing. Many of our very powerful chips cannot be manufactured. We said that to solve these problems, technology is needed…”