The ramping of US restrictions on Huawei are likely to cut off the smartphone maker’s access to even off-the-shelf chips and disrupt the global technology supply chain once more, executives and experts have cautioned.
The Trump administration has now expanded its curbs on Huawei and prohibited suppliers from selling chips made using US technology into the firm without a special license – closing possible loopholes in its May sanctions that could have let Huawei access the technology via third parties.
The restrictions underscore the rift in Sino-US relations, in their worst in decades, as Washington presses governments around the globe to squeeze Huawei out, alleging the company would hand over information to the Chinese government for spying.
Huawei denies it spies for China.
“It will have a huge impact,” said Gu Wenjun, chief analyst at Shanghai-based consultancy ICWise, speaking to tighter US curbs.
“It will throw off Huawei’s plans to obtain chips by purchasing them externally, rather than relying on HiSilicon.”
Huawei has said it will stop making its flagship Kirin chipsets from September because US pressure on its suppliers had made it impossible for its HiSilicon branch to keep making the chipsets that are key components in mobile phones.
For chip suppliers too, across areas, the ban may be a drawback as most use US design software from Cadence Design Systems and Synopsys and chip-etching tools from companies including Applied Materials, experts said.
In Asia, memory chipmakers including Korea’s Samsung Electronics and SK Hynix, Japanese picture sensor manufacturer Sony and Taiwanese chipset manufacturer MediaTek may be impacted, a chip industry source said.
The source, an official at a large Asian tech supplier who declined to be named due to rules on speaking to media, said management was worried about the restrictions and were reviewing them to see if the company was affected.
It’s still unclear how many major suppliers have licenses or will need new ones to comply with these rules, or whether those licenses will be granted.
A Sony spokeswoman declined to comment, but pointed to the company’s comments earlier this month it would cut its three-year sensor investment plan to adjust to the changing environment in the smartphone market.
MediaTek said it was monitoring new developments of rules to stay in compliance, but that it did not anticipate material impact to near-term operations, based on available information.
MediaTek stock slumped 10 percent on Tuesday, on track for its worst day since 2017, while smaller Huawei suppliers were down also amid slow Asian stocks. Samsung shares were up 2 percent, and Sony and Hynix were down about 1%.
Several questions remain about the how the new curbs will be implemented and how far the US Commerce Department plans to push in terms of requiring knowledge of a transaction that could be on behalf of Huawei or an affiliate on its blacklist, political risk consultant Eurasia Group said in a note.
A semiconductor seller would”potentially be required to know where all its products end up so they do not engage in any transaction where a Huawei affiliate might be a purchaser, intermediate consignee, ultimate consignee or end-user”, Eurasia analysts said.
The team at Platform Executive hope you have enjoyed the ‘US government sanctions to slam Huawei and further roil tech supply‘ article. Initial reporting via our content partners at Thomson Reuters. Reporting by Josh Horwitz in Shanghai and Hyunjoo Jin in Seoul. Additional reporting by Brenda Goh in Shanghai, Makiko Yamazaki in Tokyo, Yimou Lee in Taipei. Writing by Sayantani Ghosh; Editing by Himani Sarkar
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