TSMC appears to be unphased by the loss of business from Huawei following US sanctions against the Chinese tech giant. Specifically, US sanctions don't permit TSMC to work with Huawei without special licensing. And it hasn't been granted that. Huawei has historically been one of the manufacturer's biggest customers.
The Taiwanese semiconductor manufacturer has reportedly picked out a site for its $12 billion Arizona plant, formalizing plans to work more closely with the US. That plant is intended to address concerns regarding national security by moving a significant amount of production for US-used components to the country. But it will also garner TSMC new customers, which the company is counting on to reduce its losses.
Simultaneously, it is looking to work with federal and state governments on incentives to offset any losses incurred since it will not be supplying Huawei's chipsets.
Both measures should, in theory, help to reduce the negative impacts of losing Huawei's business. TSMC Chairman Mark Liu also notes that it is setting aside additional land next to its primary plot. The company hopes to convince its own suppliers to set up new operations in the allocated space. That longer-term goal, if fulfilled, could help reduce the negative impacts further.
Why can't TSMC work with Huawei and why is it setting up shop in the US?
As noted above, TSMC is headquartered in Taiwan. The company was, according to Chairman Liu, convinced to move some production stateside after subsidies were suggested. But the US government offered those subsidies as part of a larger plan to end reliance on technologies that aren't produced within the country. The new plant puts its operations more in line with others in the US and gives US companies more options.
For Huawei, the impact of this move by the US is less helpful. In fact, it has forced the company to turn inward, looking for manufacturers in China for processor components for its Kirin chipsets.
Sanctions have been leveled against Huawei for several years with increasing intensity. Those have centered around concerns that the company could act as a spy agency for the Chinese government. Huawei has denied such claims outright and has called into question the validity of arguments against it.
The veracity of the conflict has further led to speculation and rumors across the industry too. MediaTek, for example, was recently forced to step forward and quell rumors that it would illegally supply TSMC chips to Huawei. The latter company has done well amid the sanctions and even experienced growth. But challenges remain as tensions between the US and China continue to mount.
TSMC could stand to make serious gains here
Now, setting aside the possibilities provided by an increase in its customer portfolio in the US, TSMC could still stand to gain business from Huawei as well. As already indicated, the company has not currently been granted a pass to deal with Huawei. But that isn't out of the question either.
If TSMC manages to gain permission to continue supplying Huawei with chips, it could stand to make sizable gains. Specifically, it may be able to pick up extra customers in the US while also keeping some of its business with Huawei going. At the very least, that will help it maintain its position in the industry.