By Daiki Koide and Yasuaki Suzuki, staff writers
The Trump administration’s ban on semiconductor exports to the Chinese telecom giant Huawei will take effect on Sept. 15. The U.S. administration is attempting to decouple the U.S. from China with regard to trade in core tech components based on the view that such components are the key to gaining a competitive edge in both the economic and military arenas. The ban will inevitably affect Japanese companies, whose annual sales of components to the Chinese company total approximately 1 trillion yen.
Kioxia Holdings (formerly Toshiba Memory Holdings) is one the companies likely to be affected by the ban. Kioxia’s production of flash memory chips for data storage involves American machine tools. “We are urgently assessing the possible impact of the export ban on our operations,” said a person in the company’s public affairs division. Meanwhile, a representative of Fujitsu said, “We don’t do a lot of business with Huawei, so we don’t expect the ban to affect us much.” Fujitsu sells hard disc drives to Huawei. At this point, many companies are taking a wait-and-see attitude.
SMBC Nikko Securities’ Takeru Hanaya, a specialist on the semiconductor industry, says: “In the short term, Japanese corporations will feel the negative impacts of the export ban. However, if competitors pick up Huawei’s share in the smartphone market and the market size remains unchanged, the U.S. ban will not have a significant mid- to long-term effect on Japanese companies.”
But some companies are more worried than others.
Sony supplies 50% of the world’s image sensors—semiconductors used for image analysis in digital cameras and smartphones. Components for smartphones make up 80% of the company’s sales revenue in sensors. It is estimated that the company’s business with Huawei involves several hundred billion yen annually. In October 2019, Sony announced a plan to boost its monthly production of image sensors 1.4-fold by March 2021. But now the company is scaling down its short-term production instead due to the uncertainty surrounding the future of its business with Huawei.
A source at an electronic device manufacturer candidly expressed his company’s concerns by saying: “We must consider the possibility that our business with Huawei will disappear someday and we’ll lose the relationship that we worked so hard to build up over the years.” (Abridged)