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Taiwan Semiconductor Manufacturing Already Made up Lost Business From Huawei

By Donna Fuscaldo - Jun 22, 2020 at 12:45PM

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Worries had surged that TSM would be hit hard by the U.S. government's rules regarding working with Huawei.

Taiwan Semiconductor Manufacturing (TSM 4.06%) has made up its lost business from Huawei after the U.S. government put restrictions on working with the Chinese smartphone maker. 

Kung Ming-hsin, head of the National Development Council in Taiwan told reporters, including Reuters, that while TSM can no longer accept orders from Huawei, the lost business has already been made up from other customers. The government official noted that the U.S. isn't calling on Taiwan to sever its ties with China but is going after Huawei because of a lack of transparency and too tight of a relationship with the Chinese government. 

Semiconductor equipment maker a chip out of a wafer in a plant.

IMAGE SOURCE: GETTY IMAGES.

In mid-May, the U.S. Commerce Department amended an export rule to prevent Huawei from purchasing semiconductors from U.S. companies, which covers semiconductor designs and chipsets, including ones made outside the U.S. that are made with U.S. equipment. That move was seen as a blow to TSM, since Huawei accounted for 14% of its revenue in 2019 and represents 20% of its sales in China. 

TSM is currently gearing up to build a $12 billion chip plant in Arizona, recently securing aid from federal and state governments. It's not clear how much money the U.S. will kick in.

For weeks, the tech stock had been in talks with the White House about developing semiconductors on U.S. soil. With tensions between the U.S. and China rising, the Trump Administration wants to bring chipmaking back to the U.S. TSM's plant will create more than 1,600 jobs in Arizona, with construction is slated to commence in 2021. 

Donna Fuscaldo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

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