To Comply With US Ban, Top Memory Storage Manufacturer WD Halts Shipments to Huawei

Western Digital (WD), one of the world’s largest manufacturers of computer hard disk drives, confirmed that it suspended its partnership with Chinese tech giant Huawei and halted all shipments to China after U.S. authorities placed Huawei on a trade blacklist banning it from doing business with U.S. companies.

The California-based WD signed a strategic cooperation agreement with Huawei on March 28, in which it agreed to supply hard disk drives (HDD), solid-state drives (SSD), and NAND Flash continually to Huawei. HDD, SSD, and NAND Flash are data storage components broadly used in Huawei’s networking equipment, data center servers, telecom systems, equipment, smart phones, and other consumer products.

Before WD, Micron, a U.S. memory chip maker and key NAND Flash supplier to Huawei, stated that it had suspended supplies to Huawei in order to comply with U.S. government regulations.

According to tech news site Gizmo China, Micron even sent a letter to its major manufacturers of computer modules, notifying them that the company would not be allowed to directly or indirectly supply the Chinese firm with modules embedded with its chips.

The U.S. Department of Commerce, citing national security risks, banned the Chinese company from obtaining U.S. tech and components in May. The Department issued a 90-day temporary license to allow U.S. companies to adjust to the changes.

But once the temporary relief expires, Huawei will likely lose its access to memory storage components from U.S. suppliers.

Seagate, another major U.S. memory storage manufacturer and Huawei supplier, has not yet announced its plans regarding the U.S. ban.

WD’s New Action

“[The U.S. export ban] required us to reassess our relationship with Huawei,” WD CEO Steve Milligan said at the Global Digital Summit in Tokyo, Japan.

Milligan introduced that WD is the third largest NAND Flash memory chipmaker in the global market, behind South Korea’s Samsung and Japan’s Toshiba, according to a June 11 report by Nikkei, which co-organized the conference. He added that Huawei’s orders contribute less than 10 percent to WD’s revenue.

As with many foreign suppliers with a Chinese clientele, WD set up a joint-venture in Beijing with the state-run chipmaker Tsinghua Unigroup in 2015. The joint-venture has been in charge of WD data center storage systems’ sales in China since then.

Milligan said WD has not and does not plan to transfer technology to Tsinghua Unigroup, nor its Beijing joint-venture.

Huawei Suppliers

The Financial Times reported on June 3 that Huawei purchases products from about 1,200 U.S. companies. It purchased roughly $11 billion of U.S. components and services in 2018.

Since the Commerce Department announced its ban, semiconductor chipmakers Qualcomm, Qorvo, Lumentum, Advanced Micro Devices, and Skyworks have stated that they would follow the ban. Intel, Xilinx, Broadcom, Analog Devices, Inphi, ARM, Infineon, and many tech firms from different countries announced that they have halted their businesses with Huawei–as any product with at least 25 percent U.S.-origin technology would also be subject to the regulations.

Huawei is facing more and more challenges in securing its supply chain.

Memory Chip Market

Meanwhile, the overall outlook of the global memory chip market is not too positive, as there is increased production capacity but shrinking market needs.

Trend Force, a market intelligence provider, reported on May 30 that the market demand for smartphones and servers in the fourth quarter of 2018 was weakening, forcing manufacturers to adjust their inventories. Because memory chips are embedded in such electronic devices, the direct result is lower sales and falling prices of memory chips in the first quarter of 2019.

But as more regions roll out the next generation of mobile wireless technology, 5G, demand for smartphones, laptops, and servers will increase, according to TechRadar on May 30.

Still, Trend Force predicted that the market will not perform due to the large inventory remaining.

Baystreet, a Canadian financial news site, estimated on June 10 that the situation will change later this year or early next year after the excess supply moderates, and the market needs more NAND Flash and other storage products.

To Comply With US Ban, Top Memory Storage Manufacturer WD Halts Shipments to Huawei

by theepochtimes.com

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