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GUANGZHOU / TAIPEI – Huawei Technologies' Largest Smartphone Assembler Cuts at Least Part of Production for World's Second-Largest Handset Manufacturer, Two Sources at Nikkei Asian Review, Following Blacklisting of Chinese society in the United States.
The Singapore-based company, Flex, headquartered in Silicon Valley and listed on the Nasdaq, told its employees Thursday that it needed to suspend manufacturing for Huawei.
"On May 23, the company informed us that it was necessary to stop production lines of Huawei smart phones and other devices to be able to await further notice," said a staff member. Flex in Nikkei in front of the main factory of the company in Zhuhai, in the south of China.
"The company has invoked the trade war as the reason for the suspension," said the employee. "We do not know when the production work will resume."
Another familiar source of supply on the record, told Nikkei that Flex had stopped part of the production for Huawei this week, but that the person could not specify the extent of the suspension.
Flex confirmed Saturday that, to ensure compliance with the new rules, shipments to Huawei and its subsidiaries were stopped immediately after the United States added the Chinese company to its blacklist. Deliveries for the "majority" of products have since resumed, suggesting that some deliveries have been suspended.
"We have resumed shipments for the majority of the products we are badembling for Huawei, after determining that these products were compliant and not covered by the new restrictions," the group said in a statement.
A Flex plant located in Zhuhai City, southern China, where a worker said that Huawei's production had been partially halted. (Photo by Yusuke Hinata)
Flex follows steps taken by other Huawei suppliers and customers in Asia, the United States, and Europe to limit their activities with the Chinese company after it is listed on the Washington Entity List, which limits its access to technology US.
Huawei refused to comment.
The photos circulating on the Chinese social media platform Baidu Tieba show a line of trucks extending from Flex's factory to Zhuhai on Monday night. In a news letter Friday, CINNO, a Shanghai – based technology consulting firm, revealed that it 's been an internal Flex notice asking employees to "get them out of business. absent from May 23 to 30, the company "continuing to comply" with the new export controls of the United States.
Huawei's other major smartphone subcontractors include FIH Mobile, a division of Taiwan's Hon Hai Precision Industry, and BYD based in mainland China, Huaqin Communication Technology, Wingtech Technology and others, according to the research company. IDC. According to IDC data, Huawei has produced about 10% of its phones internally during the October-December quarter of last year.
A source of supply told the Nikkei Asian Review that Huawei had already produced about 85 million smartphones since the beginning of the year, after a rush of badembly, more than the 75 million units sold in the first half of 2018.
Last week's Nikkei Asian Review announced that Huawei had stored chips and other components – up to a year's supply for some parts – while the company was planning US crackdown after the Arrest of its financial director, Meng Wanzhou, on December 1.
Pressure on the world's second largest maker of smartphones is increasing, many US suppliers, such as chip makers, Micron Technology, Qorvo and Lumentum, have to cut ties to follow the blacklist.
Non-US Suppliers who use US technology in their products, including the German chip maker Infineon and British chip designer Arm Holdings, are also faced with the need to halt some product shipments to Huawei so as not to violate US law. Many mobile operators, including KDDI and SoftBank Corp. Japan's Chunghwa Telecom of Taiwan and EE of British Telecom also suspended or delayed the launch of Huawei's new phones.
Nomura Securities on Thursday lowered its forecast for Huawei smartphone shipments for 2019.
"Huawei's smartphone supply chains have begun to see the negative impact of the measures taken by the Trump administration against the Chinese company, their orders having been cut in recent days," Nomura said. in a research note.
"In general, we found that cuts of 20% to 30% (or more) from June for mid-range to low-end phones could have occurred." We did not rule out the possibility of cuts. or delays in product launches for Huawei's high-end devices – the final segment in the future, "added the note.
Editor Nikkei Kensaku Ihara in Taipei contributed to the report.
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