As usual, the latest move designed to hurt Huawei will boomerang on U.S. tech firms

TSMC will still be able to ship to Huawei the 5nm Kirin chipsets that will be used in the Huawei Mate 40 series this fall. That’s because the U.S. agreed to allow Huawei to take delivery of any chips made from wafers currently in production as long as they are shipped no later than 120 days from last Friday (September 14th). Huawei has been moving the production of some mid-range chips from TSMC to Chinese foundry SMIC. Since the latter makes its chips using intellectual property from China only, it should be safely out of the reach of the U.S. However, SMIC does not have the ability at the moment to manufacturer anything more advanced than 14nm chips.

There are only three foundries worldwide that produce chips using the 10nm process node or lower. That would be TSMC, Samsung, and Intel. The latter does not do contract work and it is likely that the U.S. would also be able to block exports from Samsung to Huawei.

As usual, whenever a rule is put in place by the U.S. government designed to hurt Huawei, it is actually America and Americans that feel the brunt of the impact. Last year’s supply chain ban prevented Huawei from spending the $18 billion with U.S. suppliers that it shelled out in 2018. The new rule change could result in foundries around the world replacing the technology they purchased from American firms to make chips with equipment sourced from other countries. This would allow these foundries to skirt around the new rules and ship chips to Huawei. And while not aimed directly at Huawei, the tariffs imposed on Chinese exports by the U.S. government actually affect U.S. companies and consumers rather than Chinese companies. That’s because it is an import tax that gives U.S. firms like Apple the opportunity to pay the tax themselves or pass it on to Americans in the form of higher prices.