High-ranking representatives of the US government want to limit the supply of chips to Huawei Technologies also from manufacturers outside the USA. Like the news agency Reuters citing informed sources, foreign companies using U.S. chip manufacturing equipment would need to obtain a U.S. license before supplying advanced products to Huawei.
Since most of the chip manufacturing equipment used worldwide is based on US technology, the change would mean a massive expansion of the export control agency.
It is unclear whether President Donald Trump, who apparently opposed the proposal last month, will sign the rule change.
The decision was made when representatives of various government departments met on Wednesday and agreed to change the Foreign Direct Product Rule to reflect some US-made goods or technology-based goods that are subject to US regulations.
All chip manufacturers use equipment from ASML from the Netherlands and from US companies such as Applied Materials and Lam Research. It seems questionable that the USA can dictate to foreign companies what happens to its billion-dollar machinery. Mark Liu, the head of TSMC, previously said his company was ready with everyone "to deal with new export control regulations". Huawei subsidiary Hisilicon estimates that more than 10 percent of TSMC's total revenue, which exceeded $ 35 billion last year, is generated by industry representatives. TSMC does not report sales by individual customer.
The Taiwan Semiconductor Manufacturing Company is the largest semiconductor contract manufacturer in the world. TSMC produces chips for AMD, Apple, Huawei, Intel, Nvidia, Qualcomm, Xilinx and others.
The new move is a response to the boycott by the Department of Commerce in May 2019 showing little impact on Huawei. Many U.S. companies build chips abroad, so after an initial shock, they continue to sell to Huawei. At the same time, Huawei found alternative sources for many components, including its own chip developer Hisilicon. The company is now able to build 5G equipment entirely without U.S. components.