LDN - Business

Huawei to stop making flagship chipsets as U.S. pressure bites, Chinese media say

[August 08, 2020] (Reuters) - Huawei Technologies Co [HWT.UL] will stop making its flagship Kirin chipsets next month, financial magazine Caixin said on Saturday, as the impact of U.S. pressure on the Chinese tech giant grows.

U.S. pressure on Huawei's suppliers has made it impossible for the company's HiSilicon chip division to keep making the chipsets, key components for mobile phone, Richard Yu, CEO of Huawei's Consumer Business Unit was quoted as saying at the launch of the company's new Mate 40 handset.

With U.S.-China relations at their worst in decades, Washington is pressing governments around to world to squeeze Huawei out, arguing it would hand over data to the Chinese government for spying. Huawei denies it spies for China.

The United States is also seeking the extradition from Canada of Huawei's chief financial officer, Meng Wanzhou, on charges of bank fraud.

In May the U.S. Commerce Department issued orders that required suppliers of software and manufacturing equipment to refrain from doing business with Huawei without first obtaining a license.

"From Sept. 15 onward, our flagship Kirin processors cannot be produced," Yu said, according to Caixin. "Our AI-powered chips also cannot be processed. This is a huge loss for us."

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A Huawei company logo is seen at the Shenzhen International Airport in Shenzhen in Shenzhen, Guangdong province, China June 17, 2019. To match Special Report HEALTH-CORONAVIRUS/BGI REUTERS/Aly Song/File Photo

Huawei's HiSilicon division relies on software from U.S. companies such as Cadence Design Systems Inc or Synopsys Inc to design its chips and it outsources the production to Taiwan Semiconductor Manufacturing Co (TSMC), which uses equipment from U.S. companies.

Huawei declined comment on the Caixin report. TSMC, Cadence and Synopsys did not immediately respond to email requests for comment.

HiSilicon produces a wide range of chips including its line of Kirin processors, which power only Huawei smartphones and are the only Chinese processors that can rival those from Qualcomm in quality.

"Huawei began exploring the chip sector over 10 years ago, starting from hugely lagging behind, to slightly lagging behind, to catching up, and then to a leader," Yu was quoted as saying. "We invested massive resources for R&D, and went through a difficult process."

(Reporting by Josh Horwitz in Shanghai and David Kirton in Shenzhen; Editing by William Mallard)

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