South Korea's Samsung Display seeks licence to supply Huawei

Saturday, 12 Sep, 2020

They ban non-American companies from selling components developed with US technology unless they have a special permit to do so.

It all started with the USA trade ban, which meant Huawei could not get access to Google services or do business with US companies, including chipmakers Qualcomm and Broadcom.

According to reports from various Korean news outlets, the companies will suspend trade on September 15th. The two organizations are accounted to cut business attaches with Huawei when the new rule takes effect next week.

Samsung Electronics Co. and other South Korean memory chipmakers will feel the pinch of additional USA sanctions on Chinese telecom giant Huawei Technologies Co. that take effect next week, industry sources said Wednesday. With Samsung and HK Hynix also now forced to stop selling components to the Chinese giant, it poses a serious threat to the company's smartphone business. According to report by Eugene Investment and Securities, Samsung Electronics earned 7.37 trillion won ($6.2 billion) from chip sales to Huawei, contributing 2.3 percent to the Korean chip giant's total sales past year.

The smartphone market is becoming a lot more difficult for Huawei, as the United States sanctions are making it harder for the company to launch new products.

In response to the various sanctions, the Chinese government funded a domestic semiconductor company called SMIC.

Huawei is one of the five biggest customers of Samsung, with sales of around 7.3 trillion won ($6.16 billion) previous year.

While Huawei's troubles are beneficial for Samsung, it is also a considerable loss for the Korean company's semiconductor arm.

So even though Samsung may gain more global sales from crippling Huawei, it'll lose one of its biggest clients in terms of component sales.

For other big firms like SK Hynix, opportunities for an offset will be much more limited. Huawei has already lost TSMC as its main chip provider, meaning that the upcoming Huawei Mate 40 series will be the last one to include Kirin processors.