US sanctions force Huawei to stop making Kirin chips

Huawei can no longer produce the chips it needs for its high-end smartphones with features like 5G and AI, due to US government sanctions

Chinese telco Huawei will cease production of its most advanced Kirin chipsets from next month, due to the growing impact of US sanctions.

According to financial magazine Caixin, the CEO of Huawei's Consumer Business Unit, Richard Yu Chengdong, told a tech industry forum last week that the company would stop production of the Kirin 9000 chipset from the 15^th September.

"From September 15th onward, our flagship Kirin processors cannot be produced," Yu said.

"Our AI-powered chips also cannot be processed. This is a huge loss for us. Huawei's mobile phones have no chip supply, which makes our shipment volume this year a little less than [the] 240 million units [shipped last year]," he stated.

The US tightened restrictions on Huawei in May, banning suppliers of software and manufacturing equipment worldwide from using American technology to manufacture components for Huawei without first obtaining a license from the government.

Huawei's HiSilicon chip division relies on software from US firms to design a wide range of chips, including Kirin types. TSMC produces the chips for Huawei, using equipment from US vendors.

Last month, TSMC said that it had stopped taking new orders from Huawei since May to comply with the US government's orders.

While losing a big customer like Huawei is not an ideal situation, TSMC said that it was 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.

But, for Huawei, there is no other option than to stop production of advanced Kirin chips, as the company does not have the capacity to produce such chipsets. The firm will, however, continue to produce mid-range Kirin chips for more affordable smartphones.

Meanwhile, Qualcomm is reportedly lobbying the Trump administration to allow it to sell components to Huawei.

According to the Wall Street Journal, Qualcomm has told the government that American tech firms would lose their dominance in the 5G market If Huawei switches to MediaTek or Samsung components.

'If Qualcomm is subject to export licensing, but its foreign competitors are not, US government policy will cause a rapid shift in 5G chipset market share in China and beyond,' Qualcomm said, according to the WSJ.

That 'would hamper American research and leadership on 5G issues' and would be 'an unacceptable outcome for US interests,' the company stated.