Tighter US restrictions against Huawei are going into effect September 15, and companies around the world are being forced to pick a side. We’ve already seen the world’s largest foundry, TSMC, say it will no longer do business with Huawei, even though Huawei was crowned the world’s largest smartphone manufacturer last quarter. The next companies to drop out are Samsung, LG, and SK Hynix, according to a pair of reports from Korean site Chosun Ilbo.
First up, Chosun Ilbo reports that Samsung Electronics and SK Hynix have both said they will stop selling chips to Huawei. Samsung is the world’s No.1 memory maker, and SK Hynix is No.2, so Huawei will have to source NAND flash and DRAM memory from somewhere else. The No.3 memory manufacturer is American company Micron, which has already shunned Huawei. In the RAM market, Samsung, SK Hynix, and Micron are the “big three” manufacturers and combined have around 94-percent market share. All three are also major players in the NAND flash-memory market, which, according to Statista, goes Samsung (35.5 percent), Kioxia (18.7 percent, formerly Toshiba Memory), Western Digital (14.7 percent), Micron (11.3 percent), Intel (9.7 percent), and SK Hynix (9.6 percent). Those manufacturers, covering 99.5 percent of the market, all reside in the United States, Japan, or South Korea, so no one seems likely to sell to Huawei. Things are looking grim.
Chosun Ilbo says that Huawei is the world’s third-largest purchaser of semiconductors, and the company accounts for 6 percent of Samsung Electronics semiconductor sales and 15 percent of sales for SK Hynix. Huawei has known this ban has been coming for a long time, though, and the report says the company has “a two-year inventory.”
Report #2 says that Samsung Display and LG Display have both suspended sales to Huawei. Samsung makes the best OLED displays for smartphones, and no matter what the name on the outside of a phone says, most flagship smartphones are using Samsung displays. There are plenty of ways to chop up the display market, but the most relevant is the OLED smartphone market, where, according to Pulse’s Q4 2019 numbers, Samsung had an 81.2-percent market share and LG had a 10.8-percent share.
Huawei’s best bet for displays is Chinese company BOE, which was No.3 on the list, with a 1.6-percent market share. Huawei regularly uses BOE displays on some devices, most famously as a supplier for the Huawei Mate X, although flagships like the P40 Pro+ still used a Samsung display. BOE is the largest overall display manufacturer, but it hasn’t had much of a foothold in the OLED smartphone market.
A chip stockpile and alternative Chinese suppliers can keep Huawei going for a bit longer, but the company’s immediate problem is software, where it has been blocked from using the Play Store and Google’s Android apps. Tomorrow, Huawei is expected to show off the progress on its Android rival “Harmony OS,” which was announced last year. It is still probably not ready to fight Android, but long term the company hopes the project will succeed where Tizen, Windows Phone, Blackberry 10, Sailfish OS, Ubuntu Touch, Firefox OS, Symbian, MeeGo, and WebOS have failed.