Samsung, HK Hynix Request US Approval To Supply Chips To Huawei

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Samsung and HK Hynix have reportedly requested approval from the US to continue supplying semiconductor chips to Huawei. The two South Korean chipmakers join MediaTek and Qualcomm in making such requests, Korean publication ET News reports.

All these chip companies have been affected by the US government's tightening trade restrictions on Huawei. In the latest development, the US Department of Commerce last month announced a new set of rules that threaten the survival of the Chinese company's smartphone business.

The new rules prevent Huawei access to any US-based technology, product, or components. The company cannot even obtain components from a non-American firm that uses US-origin software or technology. Essentially, these restrictions prevent it from obtaining semiconductor chips from any global company.

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Chipmakers can still apply for a special license that'd allow them to continue trades with Huawei for a limited time. However, there's little chance of the requests receiving approval.

The new rules come into effect on September 15th. That's when Samsung, HK Hynix, and others will have to cease trades with Huawei if their requests aren't approved. The two companies have already announced those measures.

"Many multinational semiconductor manufacturers including Samsung Electronics and SK Hynix made requests for approval from the US Department of Commerce," said a high-ranking official from the government. "Regardless of whether these requests get approved or not, they took necessary measures before the US Government imposes its sanction on September 15."

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Samsung and LG's display manufacturing arms will also stop selling OLED panels to the Chinese company from next week. Huawei primarily sources display panels from domestic suppliers BOE and CSOT, so those measures won't affect the company much. However, with it being unable to receive DRAM chips and NAND flash chips from Samsung and HK Hynix, it's smartphone business is facing a life-threatening situation.

It's a win-lose situation for Samsung

If there's a company that could benefit from the current situation of Samsung being unable to supply semiconductor chips and display panels to Huawei, then it's Samsung. The two companies compete directly in several industries, including smartphones and telecommunications.

Samsung's network business is already flourishing because of the US sanctions on Huawei. It recently bagged a whopping $6.6 billion equipment contract from Verizon. On the other hand, all major countries are shutting the doors on Huawei.

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Now, troubles for the Chinese company's smartphone business is also a blessing in disguise for Samsung. Its semiconductor and display manufacturing arms may lose some business, but they could look to increase sales to other customers such as Apple, Oppo, and Vivo.