Samsung, SK Hynix to cut supply to Huawei
On September 8, it was reported that Samsung and SK Hynix would stop selling components to Huawei as the Trump administration tightened sanctions on Huawei. According to reports from Chosun Ilbo and other South Korean news outlets, the two South Korean companies will terminate their deals with Huawei on September 15.
The Chosun Ilbo said in a report that Samsung Electronics and SK Hynix will stop supplying semiconductors to Huawei starting on the 15th, according to the U.S. Commerce Department’s sanctions plan. Not only memory chips, but also 5G, mobile communication (AP) and other system chips will not be available, and Huawei’s memory chips will be very difficult to obtain. Not only mobile phones, but the entire consumer business and even the cloud business will be affected.
In May of this year, the U.S. Department of Commerce announced a sanction plan to ban the sale of chips produced using U.S. equipment to Huawei. In this regard, TSMC, the world’s largest chip foundry, said at the second quarter results meeting this year: “No new orders from Huawei have been received after May, and it is impossible to supply chips to Huawei after September 15.”
On August 17, local time, the U.S. Department of Commerce issued a statement saying that companies that use U.S. equipment are prohibited from selling chips to 38 Huawei subsidiaries in 21 countries around the world.
Following the ban on the use of U.S. “equipment,” the U.S. has banned companies that use U.S. “technology” such as its patents from supplying chips to Huawei. In fact, at present, it is impossible to create ultra-fine process chips without using U.S. technology and equipment.
Huawei’s mobile phone shipment target next year drops to 50 million units
According to a recent research report released by Credit Suisse, Huawei’s smartphone shipments next year will plummet by 75% year-on-year. In 2019, Huawei’s mobile phone shipments were 240 million units. This year, some research institutions predict that Huawei’s mobile phone shipments will be around 190 million. If it falls by 75% next year, it means that Huawei’s mobile phone shipments next year will only be about 47.5 million units.
However, according to the latest report from South Korean media Thelec, Huawei informed South Korean suppliers that it plans to put 50 million mobile phones into production next year, a drop of about 74% compared to the expected shipment of 190 million units this year.
Faced with the more than 100 million smartphone market that Huawei is about to vacate next year, Huawei’s competitors – Apple, Samsung, Xiaomi, OPPO, vivo and other leading smartphone manufacturers are also actively preparing to compete for this market. For example, OPPO recently raised its sales target for the second half of this year to 100 million units. Samsung announced that it raised its shipment target for next year to 300 million units, an increase of 15%.
There is a huge gap between domestic and foreign memory chip manufacturing capabilities
After the U.S. Department of Commerce announced the above in August this year, South Korean semiconductor companies such as Samsung Electronics and SK Hynix have been considering countermeasures. A relevant person in charge of the semiconductor industry said: “After the announcement of the ban, the scope of semiconductors using US technology has not been determined, so the market has been chaotic. But it is certain that all chips, including memory chips, cannot be supplied to Huawei. “
That is to say, memory chips, an indispensable chip type in mobile phones or PCs, will also face the problem of supply interruption. As a carrier of information storage, the memory chip does not attract the same attention as the CPU, but its role is irreplaceable by other types of chips. According to the “Global Semiconductor Market Development Trend White Paper” released by CCID Consulting, the global semiconductor market reached US$468.8 billion in 2018, and the memory market was US$158 billion, accounting for nearly 30% of the global semiconductor market.
In the field of memory chips, it is mainly divided into two categories: volatile and non-volatile. Volatile: After the power is turned off, the information in the memory will be lost, such as DRAM, which is mainly used for PC memory (such as DDR) and mobile phone memory (such as LPDDR), each accounting for 30%. Non-volatile: After the power is turned off, the information in the memory still exists, mainly flash memory (Nand FLASH and NOR FLASH), NOR is mainly used in code storage media, and NAND is used for data storage.
At present, the annual market size of the global DRAM memory market is about tens of billions of dollars. Among them, Samsung Electronics of South Korea, SK Hynix and Micron of the United States monopolize more than 95% of the global market share. It is worth mentioning that since 1992, South Korea’s Samsung has ranked first in the world in the DRAM memory market for more than 20 consecutive years, occupying an absolute dominant position. The NAND Flash market is almost entirely divided by six companies including Samsung, Hynix, Toshiba, SanDisk, Micron and Intel. Among them, Samsung has a monopoly, and its NAND market share accounted for 37% of the world in 2017.
In contrast, in China, my country started late in this field, and the development speed is slow, and its self-sufficiency is even inferior to other types of chips. Domestic companies have also tried to increase their share in the field through acquisitions. In July 2015, some media reported that Tsinghua Unigroup planned to issue an offer to acquire Micron Technology, a US chip storage giant, at a total price of US$23 billion. But shortly afterward, a Micron Technology spokesperson responded that Micron had not yet received an offer from Tsinghua Unigroup, and Ziguang Group did not respond to the rumors.
Although China is not a big country in chip manufacturing, China is one of the world’s largest demanders of memory chips, and most of the chips rely on imports. It has reached 100 billion US dollars, accounting for more than 30%. The lack of self-developed production capacity has also become another major bottleneck for the development of domestic memory chips. At present, there are three domestic enterprises with a certain scale in this field: Yangtze Memory, Hefei Changxin, which cooperates with Zhaoyi Innovation and Hefei, and UMC and Fujian Province. Cooperative Fujian Jinhua. Although the three companies have begun to take shape, there are still many gaps compared with international giants. Taking YMTC NAND storage as an example, the 64-layer NAND developed by it will not be mass-produced until the end of 2019, while Samsung and Micron have already started to invest in 128-layer NAND. Mass production of NAND.
The global chip market is affected
Since the United States announced a series of restrictions on Huawei, global chip supply and demand have been affected. Last year, it purchased chips with a total value of 20.8 billion US dollars (about 142.52 billion yuan). This purchase is the third largest in the world after Apple ($36.1 billion) and Samsung Electronics ($33.4 billion). Samsung Electronics and SK Hynix have also been active in deals with Huawei. It is reported that currently in the sales of Samsung Electronics Semiconductor Division (DS) and SK Hynix, Huawei accounts for about 6% and 15% respectively. This is also the reason why industry insiders predict that SK Hynix will suffer a huge impact.
According to sources, Huawei has accumulated a large inventory of chips after the United States announced the ban, and the current inventory of Huawei chips is enough for it to use for two years. If Huawei stops purchasing chips from these chip production giants, the chip prices that have risen due to Huawei’s crazy purchases in the first half of the year will show a downward trend.
The industry believes that if Huawei decides not to buy semiconductors after that, the decline in memory chip prices may further expand. According to the survey results of the market research agency Dram Exchange, as of the end of August, the fixed transaction price of DDR4 8GB (gigabit) DRAM (inter-enterprise transaction price) fell by 5.44% compared with the end of June this year, reaching 3.13 US dollars. The semiconductor industry predicts that the price of memory chips will continue to fall in the second half of this year.
In addition to the impact on chip prices, the United States has also caused immeasurable losses to its domestic chip market. Alex Lidow, founder of a semiconductor company called International Rectifier, said he and his father and grandfather founded the company in the Los Angeles area in 1947 and had been selling semiconductors in China for decades. . Mr. Lido said he was very concerned that the Trump administration’s ban on chip sales to certain Chinese customers would not only compress current revenue, but could also permanently lose Chinese customers.
After the ban was announced, U.S. chip industry executives and other stakeholders also said that the ban has caused lasting damage to the U.S. chip industry, and that China will increase its efforts to design and produce chips domestically.
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