KIEV, UKRAINE - 2020/09/04: Huawei logo is seen on a building. (Photo by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Gett

This article is based on an article from the Japanese edition of Engadget and was created using the translation tool Deepl.

South Korea's Samsung Electronics and memory maker SK Hynix will reportedly stop supplying semiconductors to China's Huawei starting September 15. The move follows the U.S. Department of Commerce's mid-August announcement that a tighter ban on Huawei will take effect on September 15.

In August, the U.S. Department of Commerce announced that semiconductors produced using U.S. design software and equipment will in principle be banned from being exported to Huawei without prior approval from the United States. The two companies have apparently decided against continuing to do business with Huawei because of the impossibility of manufacturing ultra-fine processing semiconductors without U.S. technology.

According to South Korean media outlet Chosun Ilbo, Samsung, SK Hynix, and other South Korean semiconductor industries have been struggling to take action since the announcement of tighter U.S. sanctions in August. The U.S. Commerce Department's announcement did not specify the scope of "semiconductors using U.S. technology," which caused confusion, according to the report.

And with U.S. Commerce Department approval required to do business with Huawei after Sept. 15, South Korean companies chose to stop trading rather than incur the wrath of the U.S., according to industry sources. The U.S. is also reportedly considering adding Chinese semiconductor manufacturer SMIC to its entity list (a blacklist that prohibits companies from doing business with U.S. companies without U.S. government approval), and while the U.S. seems determined to choke off Chinese high-tech companies, no wonder Samsung and others didn't dare to seek approval from the US.

While the sanctions have certainly put Huawei on the back foot, it is also a double-edged sword for the foreign companies it does business with. For SK Hynix, in fact, 40% of its $13.3 billion in revenue in the first half of 2020 will come from exports to China. Japanese companies are no strangers to this, and this could have serious repercussions for them.

Source: Chosun Biz

This article is based on an article from the Japanese edition of Engadget and was created using the translation tool Deepl. The Japanese edition of Engadget does not guarantee the accuracy or reliability of this article.