HUAWEI SUPPLIERS RESIST MOVE TO CHINA PRODUCTION BASES

Huawei Technologies is struggling to meet a goal to shift a key part of its output into China, with some of its suppliers reluctant to make changes to their own operations amid deepening uncertainty in the global semiconductor industry.  Cheng Ting-Fang and Lauly Li wrote on June 10, 2020 for the Nikki Asian Review.

The world's biggest telecom equipment maker has been pushing to get more of its supply chain into China as it faces a crackdown by the administration of US President Donald Trump over national security concerns. Such a shift would help Huawei mitigate the impact of any further U.S. pressure on its suppliers.

In particular, Huawei wanted its chip-related suppliers to carry out most chip packaging and testing -- the last step in making semiconductor components -- in China by the end of this year at the earliest. It has made a similar request concerning production of the print circuit boards on which chip components are mounted, sources familiar with the matter told the Nikkei Asian Review.

However Huawei's drive has hit challenges because of the economic uncertainties brought by COVID-19 as well as the latest round of Washington's clampdown. Many suppliers want to "stay on the conservative side and avoid making bold movements" at a time when there is "low visibility over future demand," said a supply chain executive with direct knowledge of the issue. "Some chip testing and packaging suppliers and print circuit board makers already helped Huawei expand some capacity in China over the past year... however, not all of them answered the call," said the executive. "The global pandemic which already hit demand as well as the US strong hostility against Huawei have weakened suppliers' incentive to swiftly address the Chinese company's push."