Samsung, SK Hynix to suspend trade with Huawei

Sept. 8 (UPI) -- South Korea's top manufacturers of semiconductors are to suspend all transactions with Chinese firm Huawei, in compliance with the latest U.S. sanctions against the company accused of spying and stealing technology.

Samsung Electronics and SK Hynix are to end all supplies of semiconductors to Huawei beginning next Tuesday, a move that could hurt sales for both firms, South Korean newspapers Chosun Ilbo and JoongAng Ilbo reported.

The decision from South Korean companies come after global Taiwanese chip supplier TSMC had said earlier this year it will halt processing new orders from Huawei.

Huawei's response to the global ban of semiconductor shipments has been to buy up as much inventory as possible ahead of sanctions, which are to go into full effect in mid-September. According to Taiwanese research firm DRAMXchange, Huawei's buying spree has driven up the spot price of DRAM or dynamic random-access memory, creating windfall profits for chip suppliers.

South Korean firms are bracing for significant drop in sales. SK Hynix reported a total of $13.3 billion in revenue for the first half of 2020, according to the JoongAng. Of that amount, $5.5 billion, or more than 40%, was earned through exports to China, with many Chinese firms purchasing the South Korean chips in order to supply Huawei's production lines for smartphones and computer tablets.

On Aug. 17, the United States imposed additional sanctions against Huawei, describing the company as an "arm of the Chinese Communist Party's surveillance state." The sanctions require third-country suppliers to cease trade unless prior approval is received from Washington, the U.S. Department of Commerce has said.

The latest U.S. policy applies to tech firms that use U.S. technology among its parts and components. Prices of memory chips are expected to trend downward after Sept. 15, according to reports.