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Samsung Electronics and SK Hynix are effectively discontinuing their supplies of DRAM semiconductors to Huawei amid US sanctions banning supplies to the Chinese company.

According to accounts from semiconductor industry sources on Sept. 8, domestic production and supplies of memory semiconductors for Huawei are to be discontinued as intensified US sanctions on Huawei take effect on Sept. 15.

On Aug. 17, the US Department of Commerce announced intensified sanctions barring the supply of semiconductors produced with US technology and software to Huawei as a rule without the US’ prior approval. It also announced that sanctions banning semiconductor supplies to Huawei would begin as of Sept. 15. The nature of the semiconductor manufacturing process is such that it is effectively impossible to produce and test products without the use of US technology and equipment.

“With the intensified US sanctions on Huawei announced on Aug. 17 taking effect immediately, we discontinued the introduction of new wafers to manufacture semiconductors to supply to Huawei as of that day,” an industry source said. Accordingly, the introduction of new wafers for products to be supplied to Huawei has been suspended since Aug. 17. However, supplies to Huawei were permitted through Sept. 14 to enable the sale of products for which the manufacturing process had already begun; as of Sept. 15, sales to Huawei will only be possible with approval from the US.

While transactions will be subject to US government approval as of Sept. 15, an industry source downplayed the possibility of approval applications.

“In a situation where the US is actively pursuing sanctions against Huawei, we’re cautious about even applying, since we have no way of knowing whether they’ll approve the transactions,” the source said.

According to stock market analyses, Huawei accounted for 3.2% of Samsung Electronics’ sales last year at around 7.37 trillion won (US$6.2 billion), and 11.4% of SK Hynix’s sales at around 3 trillion won (US$2.5 billion). A semiconductor industry source said, “With supplies being discontinued to such a major client, plans are under way to diversify supplies to other Chinese smartphone manufacturers that are expected to make up for the Huawei volumes, including Oppo, Vivo, and Xiaomi.”

By Koo Bon-kwon, senior staff writer

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