Micron Technology has yet to regain a new license to continue selling to memory chips to Huawei Technologies. This may lead to the company’s sales to fall for the next two quarters, as per an executive.
According to a Reuters report, Micron had previously obtained the license to supply the Chinese tech giant with memory chips for its smartphones and servers from its factories outside of the United States. For those unaware, companies are required to gain a special license from the US government, after the smartphone maker was put in the “Entity List” by the US Commerce Department, and faced an export ban.
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Recently, the US has further reinforced the restrictions on the company that bars it from using any US made tools or software, which came into effect as of 14th September 2020. In other words, this has caused a complete halt in shipments from Micron to Huawei. The latter accounted for about 600 million US Dollars out of the former’s 6.06 billion US Dollars in sales for the fiscal fourth quarter that ended on 3rd September 2020, meaning about 10 percent of its total sales.
According to Sumit Sadana, Micron Chief business officer, “The manufacturing equipment in those fabs are obviously from U.S.-based companies,” which is why the shipments have stopped altogether. The senior official also added that “As soon as we get the license, we would work with Huawei to determine how we can resurrect the business.” So, if a license isn’t acquired, Micron stands to lose out on a notable part of its business due to recent sanctions.
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