In the final days of his presidency, Donald Trump revoked the licences of several major Huawei suppliers, including Intel, to sell to the Chinese vendor. And the tensions with China are starting to be very visible in chip providers’ financial results, with Qualcomm reported to have suffered almost 50% year-on-year decline in sales to China last year.
Since Huawei was placed on the USA’s Entity List in May 2019, any components maker has to secure a special licence to sell to the Chinese firm. Five days before the inauguration of incoming president Biden, the US Commerce Department issued “intents to deny a significant number of licence requests for exports to Huawei and a revocation of at least one previously issued licence”.
Intel had gained a licence in September, but is now understood to have lost it again, while another 150 applications were pending, accounting for an estimated $120bn of sales.
Such sanctions, of course, also encourage other Chinese customers to look close to home for their components rather than be vulnerable to the same treatment as Huawei. Qualcomm is not only unable to sell its smartphone chips to Huawei, but it is reportedly losing business with other Chinese firms too, mainly to MediaTek, and to Huawei’s own chip subsidiary, HiSilicon (though this has its own problems since it cannot access TSMC or Samsung, the only foundries with the advanced 5nm process).
A report by CINNO shows that the US firm’s shipments to China fell by 48.1% year-on-year, and its Chinese market share fell to 25.4%, down from 37.9% in 2019. Taiwan’s MediaTek grew its market share in China from 18% in the first half of 2020 to 31.7% in the second half, and it became the largest smartphone processor supplier in China for the first time.