Ever since placing Huawei on the Entity List last year, the US Department of Commerce has been tightening its trade restrictions on the Chinese giant with several amendments to the rules. The latest of them was announced last month and its starting to affect Huawei now.
According to recent reports coming from Korea, Samsung Display and LG Display will stop supplying mobile display panels to Huawei. This is the latest in a string of blows to the beleaguered Chinese conglomerate. Reports earlier this week said Samsung and HK Hynix will suspend chip trades with the company on September 15th.
The new set of rules defined by the US Department of Commerce come into effect next week. That's when the display manufacturing arms of Samsung and LG are likely to cease trades with Huawei. The new rules ban any American or non-American company from selling components that use a US-origin software or technology to Huawei.
Since display panels made by Samsung Display and LG Display use certain chips that are based on American technologies, both companies cannot supply those panels to the Chinese company unless they get special approval from the American government.
Huawei used Samsung's OLED panels on its select flagship smartphones. Most recently, the company used OLED panels from Samsung Display on the P40 Pro+. The vanilla P40 Pro, on the other hand, used screens from LG, Samsung, and BOE. The Huawei P30 series also used Samsung OLED panels.
While Huawei will be able to continue sourcing OLED screens from Chinese suppliers such as BOE and CSOT, it'll miss out on Samsung's superior quality. This still isn't as worse a piece of news for Huawei as the chip restrictions, which threaten the survival of the company's smartphone business.
Samsung Display, LG Display To Suspend Trades With Huawei
Huawei has emerged as Samsung's main rival in the smartphone industry. So troubles for the Chinese company are often good news for the South Korean giant, even if it means loss of business for one of its arms. And this time around, it isn't much big of a loss as Huawei isn't the company's biggest OLED customer. Apple is a major customer of Samsung Display's OLED screens.
The impact of this ban will be minimal on LG Display's business as well. In a statement to Reuters, the company said it has limited panel shipments to Huawei. The company still plans to diversify its customer base in the future. Samsung declined to a request for comment.