Is Samsung Cutting off Chip Sales to Huawei?

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Samsung and semiconductor company SK Hynix will reportedly stop selling components to Huawei as the U.S. tightens sanctions on the Chinese phone manufacturer. According to Chosun Ilbo and other South Korean news outlets, the companies will suspend trade on September 15. That’s when new rules begin that limit dealing with Huawei, according to The Verge.

The sanctions were introduced in August, following other restrictions implemented last year. They ban non-American companies from selling components that were developed with U.S. technology unless these companies obtain special approval, Inside Towers reported.  

The change poses a serious threat to Huawei, which has said it may no longer be able to make its Kirin chipsets. However, Huawei’s business is valuable to many other companies, as it recently became the top-selling smartphone manufacturer, according to The Verge. Taiwanese chipmaker TSMC reportedly suspended sales to Huawei this May after an earlier round of restrictions. Huawei called those rules “arbitrary and pernicious.”

The Chinese government has funded a domestic semiconductor company called SMIC, which has been offered as an alternative supplier for Huawei. But the U.S. also threatened sanctions against SMIC, leading the Chinese Foreign Ministry to accuse America of “blatant hegemony.” Huawei has fewer options for sourcing parts for its phones, although American chipmaker Qualcomm has reportedly lobbied the Trump administration to lift restrictions and let it sell to Huawei.

The U.S. government argues that Huawei infrastructure poses a national security threat and that Huawei has engaged in trade secret theft and violated sanctions against Iran. The increasingly restrictive Huawei bans could reshape the smartphone and chip market.

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