Western Digital has stopped supplying Huawei, one of its biggest customers, to comply with the US ban on American companies trading with the Chinese tech giant.
Western Digital signed a strategic cooperation agreement with Huawei in April 2019, which aimed to strengthen an existing partnership that sees it supply Huawei with HDDs, SSDs and NAND flash storage for servers, as well as flash memory for other devices such as smartphones.
However, Western Digital CEO Steve Milligan told Nikkei this week that Western Digital has been forced to reconsider its relationship with Huawei following the US government’s decision in May to put Huawei on a trade blacklist.
The WD shipment freeze could damage Huawei as Western Digital is the world’s biggest manufacturer of hard drives globally. Seagate, the second biggest HDD maker, is also an American company. That leaves only Toshiba, by far the smallest of the big three, as a potential supplier.
Western Digital is also the world’s third-largest NAND flash chipmaker by market share, and the US appears to leave Huawei with only Toshiba, Samsung and SK Hynix as potential suppliers of flash memory.
The ban is a headache for WD, which said it is considering seeking a license from the US government to resume trade with Huawei.
“The tech supply chain in the world is quite entangled,” Milligan told Nikkei. Undoing that would be “dramatic [and[ not good [in the] longer term for either China or the US”,
The trade row between the US and China is already hitting the tech industry. The memory chip market is seeing prices hit because of oversupply, and manufacturers could even see the price fall below the cost of making them.