Huawei ban will have a short-term negative impact on South Korean companies


Huawei logo

Huawei is a global company that sources its components from different parts of the world. Most of these components use American technology in their manufacturing process. The latest ban from the U.S. suggests that Huawei can no longer use these components. This ban will affect a good number of companies. However, the effect may not be significant because Huawei is just one company. According to Yonhap News, a South Korean media source, the U.S. sanctions against China’s Huawei will have a short-term negative impact on South Korean companies. 

Huawei Kirin 1020

The ban will take effect next week, and Samsung and other Korean memory chip manufacturers will stop shipment to Huawei. The new US sanctions prohibit the supply of US equipment, software, and semiconductor chips to Huawei without the prior approval of the US government. According to the report, Samsung, SK Hynix, and most other global manufacturers will basically stop shipping to Huawei next week.

“As far as I know, Samsung will stop shipping chips to Huawei from next Tuesday, but it is still possible to sell products to Huawei after it has been approved by the United States.” An industry observer said.

American technology is almost everywhere

According to sources, this is because American technology is used in almost all chip production fields from design software to production equipment. Huawei is one of Samsung’s top five largest customers. According to reports, approximately 10% of SK Hynix’s sales depend on Huawei.

Industry observers in South Korea claim that the industry generally expects that the US sanctions will have a negative impact on Samsung and other industry participants in the short term. However, in the long run, these sanctions are unlikely to have a significant impact. They also believe that Samsung may benefit from the US move. This is because it may widen the gap between it and Huawei in the smartphone market. This will give the South Korean manufacturer the opportunity to catch up with the Chinese company in the 5G field.

For Huawei, it is not currently not competing, it is battling for its survival. There are reports that Huawei will produce only 50 million smartphones in 2021. However, there are also reports that the company will open 50 physical stores across Europe. Furthermore, rumors claim that Huawei will have to terminate its smartphone business. It is only a matter of time before we get to see how Huawei will cope with these restrictions.

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