TSMC Gets US License To Supply Chips To Huawei, But There's A Twist

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Taiwanese semiconductor giant TSMC has obtained a special license from the United States Department of Commerce allowing it to supply chips to Huawei. However, before you jump to the conclusion that Huawei may now see a turn of fortunes, this license essentially does no good to the beleaguered Chinese smartphone maker.

According to a new report from Sina.com (via PhoneArena), the chips that TSMC is allowed to supply to Huawei will have to be produced using more "mature" process nodes. People familiar with the matter told the Associated Press that the license only covers 28nm and higher process nodes.

This essentially means Huawei still can't obtain any modern-day chips from TSMC. The Taiwanese company's latest flagship chips are based on 5nm process nodes. It's now moving on to 3nm and 2nm chips.

However, as things stand, TSMC can't supply any of its modern chipsets to Huawei. Those include chips based on 16nm, 10nm, and 7nm process nodes as well. Since 28nm or older chips are of no good to the Chinese electronics and telecommunication giant as far as its smartphone and networking businesses are concerned, this license doesn't really help it much.

TSMC is reportedly building a manufacturing facility in the US to please the American government. The company hopes to win the Trump administration's trust and get approval to supply Huawei with its latest chips. However, the US reportedly has not made any such guarantees to TSMC. The facility in Arizona will likely be operational by 2023.

TSMC obtains "the" license but that's of no real use to Huawei

The latest amendments to the US-imposed trade restrictions on Huawei, effective 15the September 2020, has cut the company from all its chip suppliers. Any foundry around the world that makes use of anything remotely American in the manufacture is barred from supplying chips to the Chinese company. Such companies would require to obtain a license from the United States Department of Commerce if they want to continue doing business with the Chinese behemoth.

While almost every major chipmakers including Samsung, HK Hynix, Qualcomm, MediaTek, TSMC, and SMIC have applied for the license, there's little chance of getting the approval. And if they do get the license, it seemingly comes with some major caveats that essentially render it useless.

Apparently, the US government doesn't want to completely block Huawei from receiving semiconductors. This is evident from the Commerce Department granting licenses to TSMC as well as AMD and Intel. However, with all the limitations in place, those intentions appear to be a mere formality.

Huawei's still doing pretty well overall. It recently reported a 21.65 percent year-over-year growth in revenue in the third quarter, setting a new single-quarter record. The reported revenue of 84.488 billion yuan ($73.9 million USD) is also up 14.7 percent from the previous quarter.

Reports suggest that Huawei has also stocked enough chips for its upcoming Mate 40 series flagships. However, things don't look brighter for the company post that. Its smartphone business is still in threat unless we see some dramatic changes and developments in the coming months.