Samsung to cease supplying Huawei with chips beginning next week

Samsung’s decision to cease supplying Huawei with semiconductor solutions has been set in stone, revealed the Korean media today. Samsung as well as HK Hynix will reportedly stop trading semiconductors with Huawei beginning next Tuesday, September 15, leaving Huawei with little-to-no options for securing DRAM and NAND flash chips.

The reason behind Samsung’s apparent decision to cease trading with Huawei lies with additional sanctions imposed by the US Department of Commerce last month. Although the original sanctions didn’t apply to memory chip manufacturers, the new rules imposed by the US government state that any semiconductor company that uses hardware or software technologies from the United States has to obtain approval from Washington before trading with Huawei.

A win-lose situation for Samsung

Huawei was fearful this would eventually happen, reason why the tech giant decided to stock up on memory chips earlier this year and was looking at Samsung as its potential lifeline for a steady supply. But much to our expectations, Samsung is indeed willing to drop Huawei as a client should the US government extend its sanctions to cover memory chips.

This is a considerable loss for Samsung’s semiconductor arm as Huawei was one of its biggest memory chip clients. However, the South Korean tech giant also lost one of its biggest rivals in the mobile industry, so it is sort of a win-lose situation. In any case, it will be interesting to see how Huawei will try to adjust moving forward given that there’s virtually no semiconductor company in the world that doesn’t use any software or equipment obtained from the United States.

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