Micron and Western Digital particularly exposed to Huawei ban

June 20, 2019 //By Julien Happich
Huawei ban
Pursuing its analysis of the American ban on Huawei, market research firm IHS Markit sees immediate impacts on American components suppliers to the Chinese servers and smartphones manufacturer.

Last May, the US Department of Commerce added Huawei to its Entity List, requiring the company to obtain a license to buy technology from American firms. This serves as an effective blacklist, preventing U.S. companies from selling to Huawei. Although the U.S. government has eased restrictions on Huawei, allowing existing client relationships to continue largely uninterrupted for 90 days, the ban already caused Micron and Western Digital to suspend sales to the Chinese company.

“The implications of the Huawei ban are quite serious for Micron and Western Digital,” said Michael Yang, research and analysis director at IHS Markit.

“When you lose the world’s largest mobile infrastructure equipment supplier and the second-biggest smartphone maker as a customer, it’s going to have a major impact. Meanwhile, Huawei faces some touch challenges as well, including finding new sources for semiconductor memory devices, accelerating internal development plans and developing China-based manufacturing capabilities.”

In 2018, Huawei rose to take second place in the smartphone business, with 206.1 million shipments, according to the IHS Markit Smartphone Intelligence Service. This put it just slightly ahead of Apple, at 204.7 million.

The company in 2017 became the leader in the worldwide mobile infrastructure equipment market, surpassing Ericsson. Huawei has retained the top position and rose to account for nearly one-third of the market, with a 31 percent share of global revenue in 2018, as reported by IHS Markit.

Huawei’s market position has translated directly into purchasing power, with the company ranking as the world’s fourth-largest OEM semiconductor buyer in 2018. From the $15.9 billion spent by the company on semiconductors, memory represented a considerable slice, Huawei buying about $1.7 billion worth of DRAM and $1.1 billion worth of NAND flash memory in 2018.

Despite the 90-day ban respite, Micron and Western Digital have already ceased doing business with Huawei, affecting their indirect sales and prompting the two companies to ensure their wares aren’t incorporated into any products sold to Huawei by their customers. This represents a major revenue loss for Micron and Western Digital, given that the wireless communications market where Huawei competes represents a major consumer of memory and storage products.

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