Samsung and SK Hynix to permanently stop shipments of NAND and DRAM chips to Huawei

[soldier_ph]

Summary

The Trump administration has imposed sanctions against Huawei back in May 2020 to prevent it from doing business with any American Company or any Company that produces products (mainly NAND and DRAM chips) with American Intellectual Property that Huawei then buys from folks like TSMC, Micron or Samsung. But some Vendors like Samsung and SK Hynix in this instance continued supplying Huawei with those goods even after the Ban came into power. So this means that Samsung and SK Hynix are following suit the doings of the US Goverment under pressure to prevent themselves from getting sanctioned. It is reported that Samsung and SK Hynix themselves will impose sanctions against Huawei and cease all shipments of all goods to the Chinese technology Giant on September 15th 2020.

 

Quotes

Quote

-Quote from the TechPowerUp Article-

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.

 

My thoughts

While this isn't the certain death of the State backed Technology Giant, it will certainly kneecap them big time. They still have SMIC to partner and work with on producing NAND, DRAM and other critical components in China but they'll certainly lose even more Market Share and relevance in the West for the General Consumer but Guys like SK Hynix and TSMC have just lost a big Customer not only in terms of volume but also revenue.

 

Sources

TechPowerUp

[Quinnell]

Huawei is definitely gonna be suffering after this.  I think this was a necessary move to protect US interests though.  What will be interesting is to see how this ultimately affects the tech marketplace going forward.

[dizmo]

One thing that people always seem to ignore when talking about the effects on Huawei, is their competition. Yes, they'll still be able to source components from other places, but they won't be able to acquire as many, and in certain aspects they'll have to use less powerful chips in their products. This will result in less desirable devices, and in the long run could spell disastrous consequences to the company. Xaiomi, for example, is already taking huge amounts of market away from Huawei, and that was even before a lot of the stricter sanctions took place.

 

15 minutes ago, Quinnell said:

Huawei is definitely gonna be suffering after this.  I think this was a necessary move to protect US interests though.  What will be interesting is to see how this ultimately affects the tech marketplace going forward.

Agreed...a lot of the focus is on trade and 5G, but these are also used as a way to make China fall in line on other issues, like their treatment of Uighurs. More of a "if you stop doing x, then we'll back off your companies."

[Quinnell]

1 minute ago, dizmo said:

Agreed...a lot of the focus is on trade and 5G, but these are also used as a way to make China fall in line on other issues, like their treatment of Uighurs. More of a "if you stop doing x, then we'll back off your companies."

As this is a tech forum, I shied away from this fact but you're right.  It's absolutely a stick being used to force China's hand.

[dizmo]

3 minutes ago, Quinnell said:

As this is a tech forum, I shied away from this fact but you're right.  It's absolutely a stick being used to force China's hand.

I agree, but I also think it's important to get that kind of information out there, regardless of if it's a tech forum or not. It's not like we're debating the politics of it, which is slightly more against the Community Conduct, but IMO silencing the mere mention of it is very much akin to aiding in it.

[CarlBar]

Hauwei was allready suffer in other key area's and since it's backed to some degree by the CCP it really doesn't matter what the US does tho Hauwei, if the CCP wants it to stick around it will, even if it loses all relevance outside of china. OTOH the more the US turns the tech screws the more worried i become because eventually there's going to come a point at which China is going to decide to develop indigenous capabilities in response. And that would not only kill any political goals behind the sanctions, but potentially create issues for people like Intel, AMD, SK Hynix, Samsung, e.t.c The CCP likes having them in China because of the money they bring and the uniquer services they offer. Take away one part of that and they risk being shown the door. That could create absolute havoc with tech supply chains and i'm not sure where many of them would go. Most other places in the world are either more expensive or just don't have the adequate supply of trained specialists. Not to mention potential cultural approach problems, (Whilst it may have improved by now i know several years ago a lot of countries where have particular problems, (beyond the norm for other countries, including china), with Indian pharmaceutical and chemical manufacturers cutting corners and trying to hide that they where doing so resulting in outputs that where unacceptably out of spec). That could make for some real issues getting things moved.

 

Not that tech is the only industry with a china centric supply chain issue, but it's reliance on a large degree of highly trained individuals does make it less easy to move out.

[Arika]

Yay, and the US continues to throw their weight around to destroy Huawei. 

 

To the people that say "yeah, fuck China" just remember that the precedent has now been set that the US has the power to completely shut out any Tech company because they don't like them, they don't do what they are asked (and therefore just need to claim they are a threat to national security) or pretty much any other reason they like. And their "influence" over foreign companies such as Samsung where they can be bullied into the same line as US companies under threat of their own sanctions, should not be fucking applauded 

[Orangeator]

31 minutes ago, Arika S said:

Yay, and the US continues to throw their weight around to destroy Huawei. 

 

To the people that say "yeah, fuck China" just remember that the precedent has now been set that the US has the power to completely shut out any Tech company because they don't like them, they don't do what they are asked (and therefore just need to claim they are a threat to national security) or pretty much any other reason they like. And their "influence" over foreign companies such as Samsung where they can be bullied into the same line as US companies under threat of their own sanctions, should not be fucking applauded 

This isn't new precedent, similar things have been done before, by other countries as well, throughout history.

[pzspah]

From a purely consuming standpoint, Huawei have great devices and have pushed for innovation. I'll be sad to see that go.

 

As for the political bit, no comment.

[dizmo]

8 hours ago, Arika S said:

Yay, and the US continues to throw their weight around to destroy Huawei. 

 

To the people that say "yeah, fuck China" just remember that the precedent has now been set that the US has the power to completely shut out any Tech company because they don't like them, they don't do what they are asked (and therefore just need to claim they are a threat to national security) or pretty much any other reason they like. And their "influence" over foreign companies such as Samsung where they can be bullied into the same line as US companies under threat of their own sanctions, should not be fucking applauded 

Except it's far deeper than that. But you go with that surface view

[thorhammerz]

9 hours ago, Arika S said:

To the people that say "yeah, fuck China" just remember that the precedent has now been set that the US has the power to completely shut out any Tech company because they don't like them, they don't do what they are asked

The amusing part about all this is that the Americans are still playing softball - things will really become interesting  if sanctions start hitting on the energy side of things.

 

American hegemony without American interest in maintaining the global system - a recipe for chaos for all caught snoozing.

[CarlBar]

3 hours ago, thorhammerz said:

American hegemony without American interest in maintaining the global system - a recipe for chaos for all caught snoozing.

 

Until the rest of the world gets fed-up anyway. The US simply isn't big enough and important enough outside of the military sphere to make reality what it wants it to be if the rest of the world gets fed-up of it's antics.

 

The danger here is that US pressure on China, (and by extension the rest of the world), will make everyone start developing their own answers to problems. And that could leave the US out in the cold Needless to say quite a lot of US tech firms would at that point fall apart. Ad that would upend everything.

[Donut417]

13 hours ago, Arika S said:

Yay, and the US continues to throw their weight around to destroy Huawei. 

 

To the people that say "yeah, fuck China" just remember that the precedent has now been set that the US has the power to completely shut out any Tech company because they don't like them, they don't do what they are asked (and therefore just need to claim they are a threat to national security) or pretty much any other reason they like. And their "influence" over foreign companies such as Samsung where they can be bullied into the same line as US companies under threat of their own sanctions, should not be fucking applauded 

Back before we entered WW2, we had an embargo on Japan. That’s kinda what lead to Pearl Harbor attack. This is very similar, but just more selective. Now what would be screwed up is if the president banned all goods coming from China. This is more of a tap on the shoulder. “Hey we ain’t liking what you’re doing, so stop.” 

[Kisai]

22 hours ago, soldier_ph said:

 

Quotes

 

My thoughts

While this isn't the certain death of the State backed Technology Giant, it will certainly kneecap them big time. They still have SMIC to partner and work with on producing NAND, DRAM and other critical components in China but they'll certainly lose even more Market Share and relevance in the West for the General Consumer but Guys like SK Hynix and TSMC have just lost a big Customer not only in terms of volume but also revenue.

 

Sources

TechPowerUp

I eagerly await the lawsuits from non-US companies against the US government for losses incurred from canceling contracts with Chinese companies.

 

Like, yes, maybe this is the right move, but it's the "my way or the highway" kind of move that can eviscerate a company that has long term multi-year contracts.

[CarlBar]

2 hours ago, Kisai said:

I eagerly await the lawsuits from non-US companies against the US government for losses incurred from canceling contracts with Chinese companies.

 

Like, yes, maybe this is the right move, but it's the "my way or the highway" kind of move that can eviscerate a company that has long term multi-year contracts.

 

I'm pretty sure the US goverment is immune to prosecution here from past times this sort of thing has been brought up. But that doesn't mean there won't be consequences. Many foreign companies caught in the middle will be reassessing weather they want to continue doing business with US based companies or weather they should get of the boat the US is busy rocking. Cutting those kinds of ties with US firms would hurt the US as much if not more than China.

[thechinchinsong]

On 9/9/2020 at 4:56 PM, dizmo said:

Agreed...a lot of the focus is on trade and 5G, but these are also used as a way to make China fall in line on other issues, like their treatment of Uighurs. More of a "if you stop doing x, then we'll back off your companies."

Nah, I don't think any government body would blink twice about human rights in China if the PRC actually followed copyright/trade/security laws that the US/the rest of the world wanted them to. Do you believe that these sanctions on companies like Huawei and TikTok (ByteDance) would've went through if the only problems with China were the human rights ones? I would love to hope so, but history has shown that people don't get involved unless it affects their bottom line. Ultimately, these issues are intrinsically linked though, so I hope that in "if you stop doing x, then we'll back off your companies" will include not just trade/security, but also the human rights problems.

[Donut417]

3 hours ago, Kisai said:

eagerly await the lawsuits from non-US companies against the US government for losses incurred from canceling contracts with Chinese companies.

Well..... The government potential has a valid case. It states with in the Constitution of the US that the governments job is to protect peoples work. I know at some time in the past China has been caught stealing Intellectual Property.

 

36 minutes ago, CarlBar said:

Many foreign companies caught in the middle will be reassessing weather they want to continue doing business with US based companies or weather they should get of the boat the US is busy rocking. Cutting those kinds of ties with US firms would hurt the US as much if not more than China.

Other than the US has the largest economy, China is second in terms of economic size (Not far behind us last I checked). Thats what people dont understand. If you dont sell in the US, you are leaving a lot of money on the table. Look at the EU and all its ridiculous "Consumer Protection" laws. Did companies say screw Europe? Nope they just adapted. 

[CarlBar]

24 minutes ago, Donut417 said:

Well..... The government potential has a valid case. It states with in the Constitution of the US that the governments job is to protect peoples work. I know at some time in the past China has been caught stealing Intellectual Property.

 

Other than the US has the largest economy, China is second in terms of economic size (Not far behind us last I checked). Thats what people dont understand. If you dont sell in the US, you are leaving a lot of money on the table. Look at the EU and all its ridiculous "Consumer Protection" laws. Did companies say screw Europe? Nope they just adapted. 

 

The EU example doesn't work because the US isn't making it difficult to do business, it's making it impossible, and thats a much more costly thing for companies to deal with.

 

Also, none of these companies where discussing are US or China based either. So long as they don't use US company supplied hardware, software, or IP to do business they can trade with both China and the US and be unaffected by the sanctions. It isn't a choice between US and China unless you want to use US IP, Hardware, or Software.

 

What this is doing is adding the entire value of the China market to the costs of any US sourced hardware, software, and IP. Eventually there's going to come a point at which the cost of going non-US for that is cheaper than staying out of major Chinese markets. And thats the problem because that puts an enormous number of US based companies in serious trouble.

 

Lastly, even if this where to be a question of one market or the other, the US being the biggest economy doesn't mean it's the most valuable market for everything.

[divito]

22 hours ago, pzspah said:

From a purely consuming standpoint, Huawei have great devices and have pushed for innovation. I'll be sad to see that go.

 

As for the political bit, no comment.

Yup, definitely irritating that future devices might be eliminated over this. Not really any other offerings that compare.

[Donut417]

1 minute ago, CarlBar said:

most valuable market for everything.

Id say for tech we are one of the largest markets. We buy more shit than any one. 

 

2 minutes ago, CarlBar said:

And thats the problem because that puts an enormous number of US based companies in serious trouble.

Maybe in a few decades. The issue comes to this. China needs people with the select skills to design and build, that takes time to do. Then you need the factories to do it. China also have to figure out how to do it without breaking IP law.  To be honest, I dont expect this to go on long term. At most another 4 years, but I think the next President will likely try to salvage what ever relationship we have with China. At the very least this might push the Chinese to renegotiate our trade agreements with them. Which is originally what Trump wanted to do, was renegotiate our trade agreements. But its turned in to measuring contest. 

 

Also it doesn't put US based companies in trouble. They will just have to bring jobs back to the US. At least those in Washington DC think that is going to  help. To be honest there are a lot of Asian countries who are maybe even cheaper than China when it comes to manufacturing goods. So either companies will switch what countries they do business with, in terms of production. Or the American people will just have to suffer with high prices, due to items being produced here or slightly lower than that if produced South or North of the border. 

 

[CarlBar]

25 minutes ago, Donut417 said:

Id say for tech we are one of the largest markets. We buy more shit than any one. 

 

Maybe in a few decades. The issue comes to this. China needs people with the select skills to design and build, that takes time to do. Then you need the factories to do it. China also have to figure out how to do it without breaking IP law.  To be honest, I dont expect this to go on long term. At most another 4 years, but I think the next President will likely try to salvage what ever relationship we have with China. At the very least this might push the Chinese to renegotiate our trade agreements with them. Which is originally what Trump wanted to do, was renegotiate our trade agreements. But its turned in to measuring contest. 

 

Also it doesn't put US based companies in trouble. They will just have to bring jobs back to the US. At least those in Washington DC think that is going to  help. To be honest there are a lot of Asian countries who are maybe even cheaper than China when it comes to manufacturing goods. So either companies will switch what countries they do business with, in terms of production. Or the American people will just have to suffer with high prices, due to items being produced here or slightly lower than that if produced South or North of the border. 

 

 

Again this has nothing to do with what Chinese companies are doing. This is about what companies that are neither US nor Chinese being affected could do. China might have serious issues replacing everything they get from the US if they have to do it all in house. These companies however can go elsewhere in the world very easily, and they have the resources and expertise access to make it happen. They've never done it before because the US sourcing was more cost effective. This sanctions thing has the potential to change that. Chinese companies stopping buying hardware, software, and IP from US tech companies wouldn't be a huge deal. Every major foreign tech company doing it would kill many of them overnight, and cripple most of the rest.

[Donut417]

4 minutes ago, CarlBar said:

 

Again this has nothing to do with what Chinese companies are doing. This is about what companies that are neither US nor Chinese being affected could do. China might have serious issues replacing everything they get from the US if they have to do it all in house. These companies however can go elsewhere in the world very easily, and they have the resources and expertise access to make it happen. They've never done it before because the US sourcing was more cost effective. This sanctions thing has the potential to change that. Chinese companies stopping buying hardware, software, and IP from US tech companies wouldn't be a huge deal. Every major foreign tech company doing it would kill many of them overnight, and cripple most of the rest.

Like I said earlier. I dont expect this to be a very long term problem. This is purely a dick measuring contest. Our president is trying to force China to give us a better trade deal. Will his solution work? Who knows. When it starts causing issues for our economy then it will likely be resolved. Also remember that we also have added tariffs to many products coming from China and THAT has effected US businesses. My employer was effected by the tariffs. Some items have been moved to other countries, but we still get a lot of items from China. Again the tariffs went in to effect to force China to the table for trade talks. These sanctions are just another part of that. They will claim its about spying, but they need to have a good reason, they cant just blatantly say, we are blocking china from tech because we want a better trade deal. 

[CarlBar]

9 minutes ago, Donut417 said:

Like I said earlier. I dont expect this to be a very long term problem. This is purely a dick measuring contest. Our president is trying to force China to give us a better trade deal. Will his solution work? Who knows. When it starts causing issues for our economy then it will likely be resolved. Also remember that we also have added tariffs to many products coming from China and THAT has effected US businesses. My employer was effected by the tariffs. Some items have been moved to other countries, but we still get a lot of items from China. Again the tariffs went in to effect to force China to the table for trade talks. These sanctions are just another part of that. They will claim its about spying, but they need to have a good reason, they cant just blatantly say, we are blocking china from tech because we want a better trade deal. 

 

Except everyone's expecting even Biden to keep up the pressure. And he has no major interest in a better trade deal. You also wouldn't some see non-US countries, (however few that may be), piling in just to help the US get a better trade deal. there's nothing in it for them. This stopped being about trade the moment the US began trying to get other countries to join in.

[thechinchinsong]

1 hour ago, CarlBar said:

 

Except everyone's expecting even Biden to keep up the pressure. And he has no major interest in a better trade deal. You also wouldn't some see non-US countries, (however few that may be), piling in just to help the US get a better trade deal. there's nothing in it for them. This stopped being about trade the moment the US began trying to get other countries to join in.

Yeah, at this point, no matter how haphazardly Trump's sanctions and trade war has been going, the ultimate issue that is trying to be resolved is something that has been in the US policy backburner for decades. Now that Trump brought it back to the forefront, every subsequent administration has no choice but to keep addressing it in some capacity. Since going back to status quo (pre-Trump) is impossible, Biden literally has no other choice.

[Guest willies leg]

I don't like anything from China.

I got a cordless drill and drill bit set from Harbor Freight and it only lasted about an hour before I was out of bits, they were made of Chineseum, which is apparently a lot softer than wood. Smoke from the wood, then smoke from the drill. Threw the whole thing out. Now it's in the landfill.

 

I can't imagine anybody buying things like table saws or car jacks from Harbor Freight (China), can't imagine that would end up well.