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Huawei contributed TSMC NT$152.876 billion last year, an increase of more than 80% of the year, accounting for 14% of revenue, making it the second largest customer of TSMC . The legal person believes that if the United States strengthens its export control to Huawei, it will be a hidden concern for TSMC in the future.
wafer foundry TSMC revenue last year was about 1.07 trillion yuan, setting a record for 10 consecutive years. The annual report data released by TSMC recently showed that the largest customer contributed 247.213 billion yuan last year, an increase of 10% year-on-year, and the proportion also climbed from 22% to 23%. The legal person believes that Apple should be the largest customer of TSMC . What attracted more attention from the market is that TSMC's second largest customer contributed 152.876 billion yuan in performance, an increase of nearly 69 billion yuan, an increase of more than 80%, and its proportion also exceeded 10% in one fell swoop, rising from 8% to 14%.
legal person believes that Huawei should be the second largest customer of TSMC . In addition to the growth of smartphone sales and the increase in global market share, Huawei has launched a large-scale reserve of inventory in response to the risks of US export controls, and the inventory level has been raised to more than 100 days, prompting Huawei's purchase of TSMC last year to surge.
As Huawei's share of TSMC's performance has risen, whether the United States will expand export controls to Huawei, further requiring foreign companies using US chip manufacturing equipment to obtain licenses before supplying them to Huawei, or whether Huawei will transfer to China's mainland wafer foundry SMIC to respond, has attracted much attention from the market.
TSMC Chairman Liu Deyin previously stated online legal person briefing that the relevant regulatory measures were discussed in the United States because they would have an impact on the industry. The relevant associations of the American semiconductor industry have expressed their opinions and hope that there will be no restrictions. TSMC also hope that there will be no restrictions.
Liu Deyin believes that if the United States expands control, it will have an impact on short-term operations. However, TSMC is our foundry. As customers grow, the impact on TSMC medium- and long-term operations should be limited. Wei Zhejia, president of
, TSMC , also believes that SMIC cannot compete for market share, because , TSMC provides the best technology and services in all regions and is very competitive. , TSMC works closely with customers, not only will it not lose market share, but may also expand its market share.
legal person believes that TSMC process technology will be advanced to 5 nanometers this year, and SMIC is significantly behind and cannot completely replace TSMC . It is expected that Huawei's single-time SMIC's impact on TSMC should be limited.
is just Huawei's second largest customer of TSMC , and is one of the main manufacturers that first adopt TSMC 's advanced process technology. The legal person believes that if the United States strengthens export controls on Huawei, it will have an impact on TSMC 's short-term operation, which is a hidden concern for TSMC in the future.
Review of Huawei's breakthrough in the lockdown
Since the end of March 2018, when the United States announced a large-scale tariff on Chinese imported goods, the United States has begun to continuously introduce strategies to restrict China's technology industry development. In addition to the sanctions of ZTE in April 2018, the largest target of sanctions is Huawei.
In mid-May 2019, US President Trump declared a national state of science and technology emergency and included Huawei on the list of entities under export control. However, Huawei's degree of deepening its global technology industry is far beyond imagination. Judging from the five consecutive times of proactively extending the ban on Huawei, it reflects that the US supply chain is also deeply dependent on Huawei.
, but the ban still brings a majeure impact to Huawei's operations. From the perspective of the communication equipment industry, Huawei is the world's leading manufacturer and a leading manufacturer in the 5G communication competition. In 2018, Huawei accounted for 31% of the global wireless access equipment, significantly leading competitors such as Ericsson , Nokia and ZTE.
However, the US sanctions have to a certain extent restrained Huawei's development, which has benefited manufacturers such as Ericsson and Nokia . For example, Ericsson 's revenue grew by 8% in 2019, while Huawei's same business grew by only 3.8%. In addition, Nokia 's Internet business in 2019 was also better than Huawei, with an annual growth rate of 5%.But overall, the revenue scale of the two competitors is still far from Huawei, and it is difficult to shake Huawei's position in the short term.
Source: HIS, Changes in the proportion of global wireless access devices from 2011 to 2018
In addition, as the world's second largest smartphone manufacturer, Huawei's mobile phone market share in the European market has also been affected under the influence of "blocking Huawei". Due to the US sanctions on Huawei, including the ban on Google's GMS and the ban on the sale of US chips, Huawei faces severe challenges in the global market. Since the second quarter of 2019, Huawei's mobile phone overseas shipments and overseas revenue have both declined.
Source: IDC, Huawei's overseas mobile phone sales (million US dollars)
However, in the face of US sanctions and sluggish global demand, Huawei's operations are still growing significantly in adversity. In 2019, revenue grew by 19%, and pure profit grew by 5.6%. The main source of revenue growth was mobile phone-related consumer businesses, which increased by 34%. Even though Huawei's overseas revenue declined, the patriotism of the Chinese people caused by the US's gradual progress was the main reason why Huawei's performance remained unscathed.
Huawei survive
From the medium and long term perspective, the trend of the United States suppressing Huawei will not change. Faced with the continuous pressure of sanctions, Huawei has begun to make strategies to ensure the stability of the supply chain from the short, medium and long term.
Short-term: stock key components early, and inventory turnover has been extended from half a year to two years. Requirements have been made to Japanese chip and component suppliers such as Murata Manufacturing, Toshiba, Kyocera and ROHM to increase the supply of smartphone parts.
Interim: TSMC , Sun and Moonlight suppliers are required to expand their production line layout in China. At the same time, HiSilicon has considered the possibility of moving most of the production capacity of chip manufacturing to China and increased the number of orders placed on SMIC.
Long-term: expand R&D to improve chip self-made rate, strive to develop the Hongmeng ecosystem, strengthen domestic substitution, and cultivate high-quality suppliers in China. The conditions for supplier certification qualifications have been relaxed.
The biggest problem with Huawei mobile phones today is that they cannot use Google GMS system. Huawei's own HMS is only in the early stages of development, and this aspect is closely related to consumer usage habits. The inability to obtain Google's authorization is not just that it cannot use the Google App series products, but more importantly, it cannot use Google's APIs software. Popular apps such as Uber, Line, FB and Airbnb all require Google APIs, which have penetrated into the daily lives of ordinary people.
After understanding the importance of software applications, Huawei listed its Hongmeng system as an important development strategy. In the future, the system can be used in mobile phones, computers, flat panels, TVs, cars, smart wearable devices and other devices, and use the consistency of the operating system to connect all hardware devices in series.
, on the other hand, expands R&D investment and improves chip self-sufficiency. HiSilicon shoulders great responsibilities, and its products have covered mobile phone chips, mobile communication chips, network transmission equipment chips, home digital equipment chips, AI chips, server chips, base station chips, etc. In addition, HiSilicon is developing RF chips such as PA and filters to complete its product line.
Judging from the situation of Huawei mobile phone components in the past, the self-sufficiency rate is constantly increasing. Some components, such as antenna switches, Wifi chips, etc., have been able to fill in, and some components, such as OLED, DRAM, NAND, etc., reduce their dependence on a single manufacturer.
However, there are still some key components from American suppliers, such as PA suppliers Skyworks and Qorvo; filters are shared by TDK, Murata, Skyworks, and Qorvo; CPUs are Intel and AMD; PC and NB operating systems - Microsoft, as well as Red Hat's open source software, II-VI's optoelectronic components, Keysight's 5G-related tests, etc.
Finally, Huawei still has a big concern, that is, the US government may expand its export ban on Huawei. Once it is launched, it may directly cut off Huawei's high-end chip production, and even medium- and low-end chips will not be spared. However, considering Huawei's contribution to TSMC's , I believe this wafer manufacturer will be cautious.
*Disclaimer: This article is original by the author.The content of the article is the author's personal opinion. The reprint of the Semiconductor Industry Observer is only to convey a different view, and does not mean that the Semiconductor Industry Observer agrees or supports this view. If you have any objections, please contact the Semiconductor Industry Observer.
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