Huawei ban to trigger a large chip inventory backlog – VLSI Research


Huawei Ban

In early August, the US government once again expanded its ban on Huawei. The new ban prohibits suppliers from selling chips made using US technology to Huawei. At present, the US government is striving to support US semiconductor companies in moving their manufacturing centers out of Asia. According to reports, the US crackdown on Huawei under such pressure will cause trouble to the chip industry. This will cause a large inventory backlog in the entire chip industry.

Huawei ban reprieve

According to VLSI Research CEO, Dan Hutcheson, the ban on China’s Huawei has triggered a large inventory backlog in the entire chip industry. Furthermore, he claims that Washington’s previous proposal of $22.8 billion in funding assistance is far from sufficient. To fill this gap (encourage US manufacturers to build chip factories in the context of the current Sino-US technology war).

Hutcherson said that if the aid fund is raised to $50 billion, it will be possible to achieve expectations. However, it is technically impossible for the U.S. government to agree to this figure.

The construction cost of the chip factory is as high as $15 billion and most of the expenditure is spent on expensive tools. Therefore, the proposal will provide a 40% refundable income tax credit for semiconductor equipment. The aid funds include $10 billion in federal funds for government incentives to build factories. The other $12 billion will be research and development funds.

Industry insiders bluntly said that although there is a “trusted foundry” network in the United States to help provide chips to the US government, many chips must still be purchased from Asia.

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Huawei’s ban is political

The fallout between the U.S. and Huawei has attracted so much attention. According to Ren Zhengfei, Huawei’s founder and CEO, the U.S. ban on Huawei is political. He said “The desire to survive inspires us to find a way to save ourselves. No matter what, we will never hate the United States. It is just the impulse of some politicians and does not represent American companies, American schools, and American society…We still have to stick to the path of self-improvement and openness. If you want to be truly strong, you must learn from everyone, including your own enemies”.

Ren Zhengfei bluntly said that “some politicians in the U.S. want us to die…We also want to light the “beacon” of 5G, but as soon as the “match” was burned, the United States hit us with a “big stick” and knocked us unconscious. At first, I thought that there was something wrong with our compliance system…”.

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