Top memory and display suppliers drop Huawei after new US restrictions
Tighter US restrictions against Huawei are going into effect September 15, and companies around the world are being forced to pick a side. We've already seen the world's largest foundry, TSMC, say it will no longer do business with Huawei, even though Huawei was crowned the world's largest smartphone manufacturer last quarter. The next companies to drop out are Samsung, LG, and SK Hynix, according to a pair of reports from Korean site Chosun Ilbo.
First up, Chosun Ilbo reports that Samsung Electronics and
SK Hynix have both said they will stop selling chips to Huawei. Samsung is the
world's No.1 memory maker, and SK Hynix is No.2, so Huawei will have to source
NAND flash and DRAM memory from somewhere else. The No.3 memory manufacturer is
American company Micron, which has already shunned Huawei. In the RAM market,
Samsung, SK Hynix, and Micron are the "big three" manufacturers and
combined have around 94-percent market share. All three are also major players
in the NAND flash-memory market, which, according to Statista, goes Samsung
(35.5 percent), Kioxia (18.7 percent, formerly Toshiba Memory), Western Digital
(14.7 percent), Micron (11.3 percent), Intel (9.7 percent), and SK Hynix (9.6
percent). Those manufacturers, covering 99.5 percent of the market, all reside
in the United States, Japan, or South Korea, so no one seems likely to sell to
Huawei. Things are looking grim.
Chosun Ilbo says that Huawei is the world's third-largest
purchaser of semiconductors, and the company accounts for 6 percent of Samsung
Electronics semiconductor sales and 15 percent of sales for SK Hynix. Huawei
has known this ban has been coming for a long time, though, and the report says
the company has "a two-year inventory."
Report #2 says that Samsung Display and LG Display have both
suspended sales to Huawei. Samsung makes the best OLED displays for
smartphones, and no matter what the name on the outside of a phone says, most
flagship smartphones are using Samsung displays. There are plenty of ways to
chop up the display market, but the most relevant is the OLED smartphone
market, where, according to Pulse's Q4 2019 numbers, Samsung had an
81.2-percent market share and LG had a 10.8-percent share.
Huawei's best bet for displays is Chinese company BOE, which
was No.3 on the list, with a 1.6-percent market share. Huawei regularly uses
BOE displays on some devices, most famously as a supplier for the Huawei Mate
X, although flagships like the P40 Pro+ still used a Samsung display. BOE is
the largest overall display manufacturer, but it hasn't had much of a foothold
in the OLED smartphone market.
A chip stockpile and alternative Chinese suppliers can keep
Huawei going for a bit longer, but the company's immediate problem is software,
where it has been blocked from using the Play Store and Google's Android apps.
Tomorrow, Huawei is expected to show off the progress on its Android rival
"Harmony OS," which was announced last year. It is still probably not
ready to fight Android, but long term the company hopes the project will
succeed where Tizen, Windows Phone, Blackberry 10, Sailfish OS, Ubuntu Touch,
Firefox OS, Symbian, MeeGo, and WebOS have failed.
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