TSMC Upbeat In Filling Void Of Huawei Orders Lost Due To US Restrictions

Taiwan Semiconductor Manufacturing Co., the world's biggest contract semiconductor company, disclosed on Tuesday that other clients are ready to help fill the void if the US sanctions force the chip manufacturer to sever relations with its second biggest buyer, Huawei.

Nevertheless, TSMC noted that the legal implications of Washington's new ban are still being explained and emphasized that other businesses - including American ones - are also likely to be affected.

TSMC, Apple Inc. and Huawei's primary chip producer, is evaluating the latest chip-making restraints for the Chinese firm and is hoping that the issue will be ironed out in due time, Chairman Mark Liu told stakeholders Tuesday without going into details. If TSMC is forced to quit doing business with Huawei, he added, his other customers will step in to fill the void.

Liu made the comments as shareholders expressed concern about the effect of losing Huawei as a customer following sanctions from Washington. According to IC Insights, HiSilicon, Huawei's wholly owned IC design company, accounted for 14 percent of TSMC 's overall revenue in 2019.

According to Liu, TSMC is creating itself into "a contract chipmaker to serve clients worldwide," adding that the group is facing challenges that arise from the ongoing China-US trade showdown, but pointed out the firm is strengthening its market value and "looking for solutions to overcome hurdles," as reported by Chang Chien-chung and Frances Huang of Focus Taiwan.

On May 15, the US announced that non-US firms will be required to obtain a license if they use American technology to complete Chinese company orders.

Liu disclosed that the chipmaker is closely analyzing the situation and will wait until the public comment period on the new rule ends on July 14 to decide whether the company will apply to continue supplying Huawei with an export control license.

TSMC has already halted Huawei's processing of new orders, as first reported by the Nikkei Asian Review on May 18, though existing orders may be processed, provided they are delivered before mid-September.

TSMC is witnessing one of its most tumultuous years since its inception, with the global health crisis weakening the global economy and the market for smartphones that Apple and Huawei 's top clients rely on for growth.

The company, which trimmed its sales outlook for this year last April, is also caught in the crossfire as US President Donald Trump's administration is ratcheting up a campaign to contain China.

Meanwhile, TSMC has secured government subsidies for its planned $12 billion chip facility in Arizona, inching nearer to the completion of a production hub designed to alleviate national security worries and shift high-tech production to American soil.