US sanctions force Huawei to halt smartphone chip production

Huawei has confirmed that production of its most advanced smartphone chips will stop in September as a result of US sanctions.

The company, which recently overtook Samsung to become the world's largest smartphone maker, said on Friday that production of its high-end Kirin 9000 chipset would be halted from 15 September.

From this date, the AP reports, Taiwan Semiconductor Manufacturing Co. (TSMC), which has been making Kirin 9000 chips using US equipment, will no longer be allowed to manufacture chips on behalf of Huawei's HiSilicon subsidiary.

“Unfortunately, in the second round of US sanctions, our chip producers only accepted orders until May 15. Production will close on September 15,” Richard Yu, CEO of Huawei’s consumer business unit, said on Friday. “This year may be the last generation of Huawei Kirin high-end chips.”

It's likely Huawei’s upcoming Mate 40 flagship, scheduled for release in September, could be the last phone with a Kirin chip. It could also be in short supply, as Yu added that this year’s smartphone sales probably will be lower than 2019′s level of 240 million handsets.

“Huawei’s mobile phones have no chip supply, which makes our shipment volume this year a little less than 240 million units,” Yu added. “This is a huge loss for us.”

As a result of the US action, which prevents Huawei from purchasing goods and services from US-based companies, the company is reportedly calling on China to step up its chip design and manufacturing capabilities.

However, Qualcomm is also looking to step in and help. The Wall Street Journal reported Saturday that the American chipmaker had asked the Trump administration to ease the restrictions on the sale of components to Huawei, and allow it to sell chips to the company for use in its 5G phones.

Huawei isn't just facing difficulties in the US. Last month, the UK government announced that it will remove Huawei equipment from the country's 5G network by 2027 on the grounds of national security.

The decision, spurred by the US sanctions imposed on the Chinese company earlier this year, will delay the UK's 5G rollout by up to two years at a cost of up to £2 billion.