Last year, the US government effectively banned Huawei from doing business with US companies, claiming Huawei’s role as a potential spy for the Chinese government. Moreover, the US also banned any company that uses US technology to conduct any business transactions with Huawei. Even with such a far-ranging ban, Huawei managed to grow significantly, primarily due to its skyrocketing sales in China.
This year, the US took things further and effectively forced chip manufacturers to stop selling chips to, or manufacturing chips for, Huawei. As a result, Huawei can basically no longer employ TSMC for manufacturing the Kirin chips that the company uses in its smartphones. Now, MediaTek, which is one of the chipmakers that may be able to sell its processors to Huawei is asking the US for a license to continue business with the Chinese giant post the September 15 deadline.
If a license is granted to MediaTek, Huawei will be entirely dependent on MediaTek for its chip supplies. That could be a huge business boost to MediaTek. In fact, according to reports, the chip maker already has a stock of 30 million 5G chips for Huawei that it will not be able to sell to Huawei post September 15. Of course, these chips can still be sold to other manufacturers, including the likes of Xiaomi, Vivo, and Oppo. However, most of those companies can also buy chips from Qualcomm.
In response to the US Department of Commerce adding 38 more Huawei subsidiaries to the list of entities companies aren’t allowed to conduct business with, MediaTek reportedly said, “We have always followed global trade-related laws and regulations and is (sic) paying close attention to changes in U.S. export control rules and consulting external legal counsel. we will obtain the latest regulations and conduct legal analysis to ensure compliance with relevant rules. Based on existing information evaluation, it has no significant impact on our company’s short-term operating conditions”.
As for Huawei, the company isn’t backing down either. A Huawei insider quoted by Gizchina said, “Last night we had another meeting until midnight. The boss’s attitude is to step forward and die rather than take a step back.”
It remains to be seen whether the US allows MediaTek to continue selling its processors to Huawei. We will update this article when more information comes out, so check back often.