Semiconductor company MediaTek confirms that it is seeking permission to continue to supply Huawei with its products.
The United States government prohibits American companies from doing business with the Chinese tech giant. A decision that severely hurts the supply chain of said company, and a big loss for American suppliers. As such, MediaTek is applying for permission to continue as a supplier to the company.
The current ban will receive an update on September 15. On that date, regulators will implement new rules that will close some loopholes. If MediaTek is unable to secure a license on that day, Huawei will be banned from purchasing its products.
The future of Huawei hangs in the balance, as government regulators are keen on closing all loopholes. One of the company’s biggest supplier, Qualcomm, is already banned from doing business with the Chinese tech giant. With the latest set of regulations, MediaTek will be the next to be banned from doing business with the company.
— CGTN (@CGTNOfficial) August 29, 2020
American suppliers have noted that if they are banned from doing business with Huawei, there will be severe repercussions. For one, the tech giant will bring its business to other semiconductor suppliers. One of the most prominent names that come on top of the list is Samsung and TSMC.
If the government does not grant a license, this will be a huge loss for American semiconductor suppliers. Huawei is one of the biggest smartphone manufacturers in the world.
Disrupted supply chain
One of the core components when building a smartphone is a chipset. It is essentially the brain of the smartphone. Since Huawei does not develop its chipset, it relies on third-party suppliers like Qualcomm and MediaTek.
Although MediaTek is a Taiwanese company, the majority of its business is American companies. If the company chooses to continue doing business with Huawei, it faces a possible ban in the United States. Although Huawei is a huge client, the company cannot afford to lose its U.S. operations.
The United States government is accusing Huawei of working with the Chinese government. On top of that, the company is also facing accusations of intellectual property theft. The Chinese tech giant denies all of these accusations.
On several occasions, Huawei has iterated how important its chipset providers are. The company is planning to stop manufacturing smartphones if it cannot find a chipset provider.
MediaTek said that it keen on pursuing this license. Nevertheless, many in the tech community have noted that it might not be able to do so.
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