Huawei Export Ban Causing Supply Chain ‘Constraints’: Microchip COO

Microchip Technology halted all Huawei shipments in mid-September in compliance with the further Commerce Department export restrictions on the Chinese tech giant that were imposed in August (see 2008170043), said President-Chief Operating Officer Ganesh Moorthy on a Thursday investor call for fiscal Q2, ended Sept. 30. Huawei generated about 2% of Microchip’s Q2 revenue, down sequentially from Q1, said Moorthy, who will succeed Steve Sanghi as CEO March 1 as Sanghi transitions to executive chairman. Microchip is working with Commerce “to apply for licenses for products and technologies that we believe have no impact” on U.S. national security, he said. “We do not know if or when such licenses may be granted,” so Microchip assumes no Huawei revenue in the fiscal third quarter ending Dec. 31, he said. Huawei's push to complete manufacturing of all products before the shipment ban took effect caused wide-scale supply chain "constraints" during the September quarter, he said. The rush of Huawei’s competitors to replace the business Huawei lost “further stressed the supply chain,” he said. The “ongoing shift” of semiconductor manufacturing out of China to avoid the Section 301 tariffs also pressured “the capacity in other Asian countries where we manufacture through our partners,” he said. The supply chain disruptions "are continuing into the December quarter,” he said.