On CEO Predicts Chinese ‘Reluctance’ to Rely Solely on US Suppliers, Post-Huawei

Q3 revenue in the communications “end market” at On Semiconductor declined 7% from the 2019 quarter, said CEO Keith Jackson on a Monday investor call (also see Q3 here.) The chipmaker experienced strong growth in its 5G infrastructure sector, but “our smartphone business declined year over year, in part due to geopolitical factors related to a customer,” said Jackson, obviously referencing Huawei. Communications revenue growth in Q4 likely will be flat or down quarter over quarter, “due to an expected revenue decline from customer-specific geopolitical factors,” he said. “In Q3, there certainly was an impact” from the mid-September halt of shipments to Huawei due to the Commerce Department’s tightened export restrictions on the Chinese smartphone OEM, said Jackson. In Q4, until Commerce grants export licenses authorizing the resumption of shipments, “there is no business at all” with Huawei, he said. “They were one of the top customers.” Jackson thinks “there will be more reluctance” next year among Chinese smartphone OEM customers “to accept sole-source positions from U.S.-based companies as a result of the trade tensions” between the U.S. and China: “They’re very wise economic buyers, and they’re going to do the best thing for their company, but they certainly don’t want to be completely reliant on a U.S. supplier.” The Huawei business that On lost shifted quickly to European competitors, he said.