The reason behind TSMC rejection to manufacture & supply HUAWEI’s chipset

One of the chipset manufacturing giant in Taiwan – TSMC has recently announce rejection of new HUAWEI $700 million order to make HUAWEI’s chipset. When it is initially announced, TSMC has suffered some hit on its stock market with stock price falls around 5% roughly.

TSMC has recently achieved 5nm chipset breakthrough that makes it on par with Samsung chipset manufacturing advancement. Being one of the largest chipset maker in the world, it has supplied to many of the smartphone manufacturer including HUAWEI and others for many years.

With the recent HUAWEI purchase order of its 5nm and 7nm chip which is supposed to be manufactured by TSMC, they have to halt all new HUAWEI orders as TSMC claims that it has been working on maximum capacity and not able to handle much more load.

However this could be a political reason as US Commerce Department has just announced a new rule which requires “manufacturing company using US equipment and software to get a special license to supply HUAWEI”. As a result of this, TSMC has to drop off HUAWEI orders for their next Kirin 1020 chipset with 5G.

According GSMArena, HUAWEI does not comment on this while TSMC calls it rumors.

Source: GSMArena.