Huawei to stop smartphone chip production due to US sanctions

Chinese telecom giant Huawei said production of its most advanced smartphone chips would stop in September due to US sanctions.

Washington cut off Huawei’s access to US components and technology including Google’s music and other smartphone services last year. Those penalties were tightened in May when the White House barred vendors worldwide from using US technology to produce components for Huawei.

Production of Kirin chips designed by Huawei’s own engineers will stop on September 15 because they are made by contractors that need US manufacturing technology, said Richard Yu, president of the company’s consumer unit. He said Huawei lacks the ability to make its own chips.

Huawei’s HiSilicon division relies on software from US companies such as Cadence Design Systems Inc or Synopsys Inc to design its chips and it outsources the production to Taiwan Semiconductor Manufacturing Co, which uses equipment from US companies.

TSMC has stopped taking orders from Huawei since May, fearing possible repercussions.

“This is a very big loss for us,” Yu said on Friday at an industry conference, China Info 100.

“Unfortunately, in the second round of US sanctions, our chip producers only accepted orders until May 15. Production will close on September 15,” Yu said. “This year may be the last generation of Huawei Kirin high-end chips.”

More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.

Yu said smartphone sales probably will be lower than 2019’s level of 240 million handsets.

HiSilicon produces a wide range of chips including its line of Kirin processors, which power only Huawei smartphones and are the only Chinese processors that can rival those from Qualcomm in quality.

“Huawei began exploring the chip sector over 10 years ago, starting from hugely lagging behind, to slightly lagging behind, to catching up, and then to a leader,” Yu said. “We invested massive resources for R&D, and went through a difficult process.”