Taiwan Semiconductor Manufacturing (TSM -1.71%) has made up the lost business from Huawei after the U.S. government put restrictions on working with the Chinese smartphone maker.
Kung Ming-hsin, head of the National Development Council in Taiwan told reporters including Reuters while TSM can no longer accept orders from Huawei the lost business has already been made up. The government official noted the U.S. isn’t calling on Taiwan to sever its ties with China but is going after Huawei because of a lack of transparency and too tight of a relationship with the government in China. Huawei has denied those allegations, said Ming-hsin. TSM chairman Mark Liu said during the company’s annual general meeting in May the tech stock would be able to replace lost Huawei business rather quickly, Reuters noted.
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In mid-May the U.S. Commerce Department amended an export rule to prevent Huawei from purchasing semiconductors from U.S. companies and covers semiconductor designs and chipsets, including ones made outside the U.S. that are made with U.S. equipment. Companies that work with Huawei would be required to obtain a license from the Commerce Department. That move was seen as a big blow to TSM given Huawei accounted for 14% of its revenue in 2019 and represents 20% of its sales in China.
TSM is currently gearing up to build a $12 billion chip plant in Arizona, recently securing aid from federal and state governments. It’s not clear how much money the U.S. will kick in but some of the difference between what it costs to make semiconductors in the U.S. and Taiwan will be covered. For weeks the tech stock had been in talks with the White house about developing semiconductors on U.S. soil. With tensions between the U.S. and China rising, the Trump Administration wants to bring chipmaking back to the U.S. TSM’s plant will create more than 1,600 jobs in Arizona. Construction is slated to commence in 2021.
