Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday tumbled 2.23 percent as investors cautioned of the adverse effects of a US ban on using products from China’s Huawei Technologies Co Ltd (華為).
TSMC supplies advanced 7-nanometer processors to HiSilicon Technologies Co (海思半導體), the chip-designing arm of Huawei.
Shares of TSMC fell to NT$241.5, contributing to a NT$609.36 billion (US$19.47 billion) drop in market capital for the company since May 5, when US President Donald Trump tweeted that the US would hike tariffs on US$325 billion of Chinese goods.
Trump on Thursday signed an executive order declaring a national emergency that would ban US companies from using telecommunications equipment made by firms that might pose national security risks.
The US Department of Commerce later added Huawei and its affiliates to the Bureau of Industry and Security’s “Entity List,” barring the companies from procuring components and technology from US firms without government approval.
Huawei’s handset manufacturing and even sales might have to shut down completely due to the ban, Yuanta Securities Investment Consulting Co (元大投顧) said.
That might mean an order loss for TSMC, which mainly provides high-end processors such as its 7-nanometer Kirin 980 chipset to Huawei, the investment consultant said.
“The impact would likely be neutral,” as the loss might be compensated by order gains from MediaTek Inc (聯發科) or Qualcomm Inc, Yuanta said.
Washington might next ban US companies from exporting key components to China, or even from selling software to Huawei, it said.
“Our channel checks suggest that the market generally believes Huawei has raised its inventory to a level that would enable it to meet seven months of demand,” Yuanta said.
Even if the US bars component exports to China across the board, the effects on Huawei should be limited in the short term, it said.
TSMC is not the only firm in Huawei’s supply chain to suffer the brunt of the US ban.
Shares of Largan Precision Co (大立光), which supplies camera lens to Huawei and Apple Inc, yesterday plunged 9.41 percent to NT$3,850.
Since May 5, Largan’s market value has tumbled NT$110.67 billion.
The US ban might weigh on Huawei’s handset sales growth this year, Yuanta said, adding that Huawei mainly purchased camera lens and flat panels from Taiwanese suppliers.
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