TSMC confirms plan to stop supplying chips to Huawei in two months

Says it is no longer processing orders from the Chinese firm

Taiwan Semiconductor Manufacturing Company (TSMC) has confirmed the plan to officially end its relationship with Huawei, saying it would not supply chips to the Chinese technology giant after 14th September.

Addressing an investors conference on Thursday, TSMC Chairman Mark said that the company is no longer processing orders from Huawei in order to comply with the US export regulations.

"We are complying fully with the new [US] regulations," Liu said, according to Nikkei, adding that the company "did not take any new orders [from Huawei] since May 15."

"Although the regulation just finished its public comment period, the BIS [Bureau of Industry and Security] did not make a final ruling change. Under this circumstance, we do not plan to ship wafers [to Huawei] after September 14," he said.

Under the new US export regulations, the non-US chip manufacturers are required to apply for licenses from the government to use American tools and technology to supply to Huawei.

While announcing the new regulations, the US government told chip firms not to process new orders from Huawei (or its chip design arm HiSilicon) after 15^th May without a license, and to ship all previous orders before 14th September.

Losing a big customer like Huawei is definitely not ideal for the company, but TSMC said it is still in a position to achieve more than 20 per cent revenue growth in 2020, thanks to strong demand for infrastructure, 5G smartphones, and high-performance computing products, such as graphics and artificial intelligence.

Liu said that the company is working closely with other clients to make full use of its capacity.

On Thursday, TSMC also reported promising financial results for the second quarter, ending 30^th June. The results surpassed analysts' estimates and also raised the firm's revenue and spending guidance for the year.

Revenue increased 28.9 per cent to NT$310.69 billion ($10.38 billion), while net profit also rose 81 per cent year-on-year, thanks to good demand from 5G networks.

"Moving into third quarter 2020, we expect our business to be supported by strong demand for our industry-leading 5nm and 7nm technologies, driven by 5G smartphones, HPC and IoT-related applications," said Wendell Huang, Chief Financial Officer of TSMC.

The company said that it is ramping up capital spending for the current year, despite the ongoing Covid-19 outbreak. It will now add another $1 billion in its 2020 plan for spending on new equipment, taking the budget as high as $17 billion.