Taiwan chipmaker TSMC has no intention of testing the latest wave of U.S. sanctions against Huawei, regardless of how sloppy it is. Risking the wrath of Capitol Hill is not on its near-term agenda, which leaves Huawei without yet another key technology supplier.
This time, however, things are even more serious. As TSMC Chairman, Mark Liu, put it yesterday, these newest export controls might be fatal to Huawei's 2021 ambitions. At least as far as the consumer electronics segment is concerned, that is.
Truth be told, it's not like fear was the primary motivator behind TSMC's decision to ditch Huawei. The prospect of lucrative subsidies from the world's strongest economy is, by itself, reason enough for this move.
After all, this mightily convenient incentive essentially means TSMC will have a rather straightforward roadmap toward replacing Huawei business.
And it's not like TSMC is committing some grand act of betrayal here, either; it's only choosing not to test the limits of Washington's sloppily drafted embargoes against China's conglomerate.
However, it's eager to continue seeking the Trump administration's approval to do limited business with Huawei in the future. In fact, it's waiting for a response to its official application on the matter right now.
Sure, sloppy Huawei sanctions look bad; if only Trump cared about optics
The fact remains that the Trump administration's anti-Huawei push is getting sloppier by the day. The newest trade restrictions imposed on the company hence appear to have a wide range of loopholes.
Still, key supplier like TSMC remain willing to comply with the spirit of the initiative – hurting Huawei and, by extent, China. For much the same reasons, Huawei is unlikely to find its silicon salvation in South Korea.
If anything, the company may be forced to use Qualcomm's Snapdragon chipsets if it's to have any hope of shipping competitive consumer electronics in 2021.
What happens next is anything but easy to predict. Huawei still has access to vast amounts of capital, without even accounting for official support from Beijing.
Yet cutting its supply of latest chipmaking technologies may easily prove crippling to its operations in the near future. In that respect, its current predicament is a worthy culmination of decades' of animosity between itself and the U.S.
Sure, the sloppy manner in which the Trump administration continues to stifle Huawei doesn't reflect too well on the White House. But if there's one thing the 45th presidency was never concerned with, it's optics.