Wednesday, September 9th 2020

Samsung and SK Hynix to Impose Sanctions Against Huawei

Ever since the Trump administration imposed sanctions against Huawei to stop it from purchasing parts from third-party vendors to bypass the ban announced back in May, some vendors continued to supply the company. So it seems like some Korean manufacturers will be joining the doings of the US government, and apply restrictions to Huawei. According to the reports of South Korean media outlets, Samsung Electronics and SK Hynix will be joining the efforts of the US government and the Trump administration to impose sanctions against Chinese technology giant - Huawei.

It is reported that on September 15th, both Samsung and SK Hynix will stop any shipments to Huawei, where Samsung already stopped efforts for creating any new shipments. SK Hynix is said to continue shipping DRAM and NAND Flash products until September 14th, a day before the new sanctions are applied. Until the 14th, Huawei will receive some additional chips from SK Hynix. And it is exactly SK Hynix who is said to be a big loser here. It is estimated that 41.2% of SK Hynix's H1 2020 revenue came from China, most of which was memory purchased for Huawei phones and tablets. If the company loses Huawei as a customer, it would mean that the revenue numbers will be notably lower.
Sources: @chiakokhua (Twitter), Tech News Taiwan
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13 Comments on Samsung and SK Hynix to Impose Sanctions Against Huawei

#1
Chomiq
They have probably already invested in fabs located in China that will pick up the load.
Posted on Reply
#2
Assimilator
The South Korean chaebols are not going to stand idly by and be used as pawns in a trade war that they have no part in. I imagine that SKH is waiting for the results of the November election to determine their course forward... if the USA makes a sane choice, SKH can reasonably expect this idiotic trade war to end soon after, and they can afford to bleed a little cash until then.

If not, SKH and the other chaebols are going to take a long hard look at whether it makes financial sense to continue operating in the USA, or just pull out and continue to trade with China. Of course, if that happens, the only real losers will be US consumers... again.
Posted on Reply
#3
Nater
Typo:

"Samsung Electronics and Huawei SK Hynix* will be joining the efforts of the US government a"
Posted on Reply
#4
AleksandarK
Nater
Typo:

"Samsung Electronics and Huawei SK Hynix* will be joining the efforts of the US government a"
Thanks for pointing out. Fixed :)
Posted on Reply
#5
Verpal
Assimilator
The South Korean chaebols are not going to stand idly by and be used as pawns in a trade war that they have no part in. I imagine that SKH is waiting for the results of the November election to determine their course forward... if the USA makes a sane choice, SKH can reasonably expect this idiotic trade war to end soon after, and they can afford to bleed a little cash until then.

If not, SKH and the other chaebols are going to take a long hard look at whether it makes financial sense to continue operating in the USA, or just pull out and continue to trade with China. Of course, if that happens, the only real losers will be US consumers... again.
Personally I found it rather unlikely that chaebols will choose China instead of access to US technology, and large chunk of western market.
Even if chaebol cease operation in US, due to the fact that their fab also use US technology, it will be difficult to procure completely homebrew replacement, that doesn't rely on US or its allies.
That being said, current SK government is pretty pro-china, with sufficient capital investment from SK and Chinese government, I suppose it is a possible scenario, albeit unlikely.

Worth noting that in this hypothetical scenario, Samsung will still have to compete with Huawei (and numerous ODM/OEM) for Chinese market, unless there are major incentive from China, this scenrio is highly unlikely.
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#6
bogmali
In Orbe Terrum Non Visi
I said this on the SMIC news and I believe it also applies here....
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Posted on Reply
#7
AnarchoPrimitiv
Verpal
Personally I found it rather unlikely that chaebols will choose China instead of access to US technology, and large chunk of western market.
Even if chaebol cease operation in US, due to the fact that their fab also use US technology, it will be difficult to procure completely homebrew replacement, that doesn't rely on US or its allies.
That being said, current SK government is pretty pro-china, with sufficient capital investment from SK and Chinese government, I suppose it is a possible scenario, albeit unlikely.

Worth noting that in this hypothetical scenario, Samsung will still have to compete with Huawei (and numerous ODM/OEM) for Chinese market, unless there are major incentive from China, this scenrio is highly unlikely.
I think instead of saying the SK government is "pro China", it'd be more correct to say "current SK government is pro 3conomoc growth for their own domestic reasons and benefits", and this is basically true for every government... There's nothing particular about China that any economic or state actor is attracted to other than the lure of profits and being able to claim X.X% GDP growth during election season
Posted on Reply
#8
watzupken
The odds of Huawei surviving is getting slimmer and slimmer with these news every other day. One can argue that they can rely on China technology companies, but would you buy a Huawei phone with 45nm or even 28nm SOC? The fact that Chinese phone makers are the ones pushing out cutting edge hardware year after year, and the lack of from Huawei will likely mean a dead end for them. In fact with major suppliers cutting ties with them means they will be out/ on life support system (supported by the government) in the hardware space.
Posted on Reply
#9
ZILZAL
US trying hard to prevent china's tech advancement, i guess the Chinese will wait and see what will happen after the upcoming US elections and decide wither to start doing things at their side of the trade/tech war or be another US puppet state. and maybe this will be the fuel to start the 3rd WW in the next 5-10 years, (US-Japan-india-poland-uk and allies VS China-russia-iran-turkey and allies) and maybe others, who knows.
Posted on Reply
#10
Flanker
watzupken
The odds of Huawei surviving is getting slimmer and slimmer with these news every other day. One can argue that they can rely on China technology companies, but would you buy a Huawei phone with 45nm or even 28nm SOC? The fact that Chinese phone makers are the ones pushing out cutting edge hardware year after year, and the lack of from Huawei will likely mean a dead end for them. In fact with major suppliers cutting ties with them means they will be out/ on life support system (supported by the government) in the hardware space.
They will survive alright, their mobile phone division isn't really that profitable comparing to their cell towers business. They probably earn a bunch of money from their 5G patents too
Posted on Reply
#11
watzupken
Flanker
They will survive alright, their mobile phone division isn't really that profitable comparing to their cell towers business. They probably earn a bunch of money from their 5G patents too
Based on what I have been reading, the technology that they are getting cut off is not just going to impact their mobile phone business, but generally anything tech hardware related, they are going to be crippled. Only question is to what extend they are getting crippled.
Posted on Reply
#12
Flanker
watzupken
Based on what I have been reading, the technology that they are getting cut off is not just going to impact their mobile phone business, but generally anything tech hardware related, they are going to be crippled. Only question is to what extend they are getting crippled.
I suppose you were just using the mobile phone as an example, my bad.

Agreed that they will be crippled, and hard, but I'm pretty sure they will survive with the domestic market. From what I have seen, they will turn to other markets where sanctions are not targeted.
FTR, despite using a Huawei phone, I have no love for the company. They pretty much started the modern Chinese business culture of offering ludicrous bonuses to staff which requires people to work to life-threatening exhaustion to achieve them.
Posted on Reply
#13
coozie78
Dropping over 40% of their production could put easily SK Hynix out of business.
Samsung are big, but then again, losing so much revenue isn't going to help their bottom line either.
If this absurd trade war continues it's going to have a really, really serious global impact.
Wars have been fought for far less.
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