U.S. TECH FIRMS CUT OFF HUAWEI
Chipmakers Intel, Qualcomm, Xilinx and Broadcom won’t supply Huawei vital software, components
TOP United States corporations, from chipmakers to Google, have frozen the supply of critical software and components to Huawei Technologies Co., complying with the Trump administration crackdown that threatens to choke off China’s largest technology company.
Chipmakers, including Intel Corp., Qualcomm Inc., Xilinx Inc. and Broadcom Inc., have told their employees they would not supply Huawei until further notice, said sources familiar with their actions. Alphabet Inc.’s Google cut off the supply of hardware and some software services to the Chinese giant, another source said.
The move, which had been anticipated, hamstrings the world’s largest provider of networking gear and No. 2 smartphone vendor. The Trump administration, on Friday, blacklisted Huawei, which it accuses of aiding Beijing in espionage, and threatened to cut it off from the US software and semiconductors it needs to make its products.
Blocking the sale of critical components to Huawei could disrupt the businesses of American chip giants like Micron Technology Inc. and retard the rollout of critical 5G wireless networks worldwide, including in China. That, in turn, could hurt US companies that are increasingly reliant on the world’s second largest economy for growth.
If fully implemented, the Trump administration action could have ripple effects across the global semiconductor industry. Intel is the main supplier of server chips to the Chinese company, Qualcomm provides it with processors and modems for many of its smartphones, Xilinx sells programmable chips used in networking and Broadcom is a supplier of switching chips, another key component in some types of networking machinery. Representatives for the chipmakers declined
to comment.
Huawei “is heavily dependent on US semiconductor products and would be seriously crippled without supply of key US components,” said Ryan Koontz, an analyst with Rosenblatt Securities Inc. The US ban “may cause China to delay its 5G network build until the ban is lifted, having an impact on many global component suppliers”.
Huawei’s US$500 million (RM2.09 billion) bond due in 2027 was indicated 0.3 cents on the dollar lower at 93.8 cents at 2pm in Hong Kong, according to Bloomberg-compiled prices. That’s after it posted a record drop of 2.4 cents on Friday. The ban’s commencement walloped shares of Asian tech supply chain companies yesterday. Sunny Optical Technology Group Co. was again the worst performer on Hong Kong’s Hang Seng Index, while Luxshare Precision Industry Co. dived as much as 9.8 per cent in Shenzhen.
To be sure, Huawei is said to have stockpiled enough chips and other vital components to keep its business running for at least three months. It’s been preparing for such an eventuality since at least the middle of last year, hoarding components while designing its own chips, sources said. But its executives believe their company has become a bargaining chip in ongoing US-Chinese trade negotiations, and that they will resume buying from American suppliers if a trade deal is reached.
The American companies’ moves are likely to escalate tensions between Washington and Beijing, elevating fears that President Donald Trump’s goal is to contain China, triggering a protracted cold war between the world’s biggest economies. In addition to a trade fight that has rattled global markets for months, the US has pressured both allies and foes to avoid using Huawei for 5G networks that will form the backbone of the modern economy.
“The extreme scenario of Huawei’s telecom network unit failing would set China back many years and might even be viewed as an act of war by China,” Koontz wrote.
“Such a failure would have massive global telecom market implications.”
The American clampdown deals a direct blow to Huawei’s fast-growing mobile devices division.
Huawei would only be able to access the public version of Google’s Android mobile operating system, the world’s most popular smartphone software. It wouldn’t be able to offer proprietary apps and services from Maps and search to Gmail, said a source.
That will severely curtail the sale of Huawei smartphones abroad, though it’s unclear when those apps, which are popular mainly outside of China, will become unavailable.