FRESH BLOW FOR HUAWEI

British chip designer ARM, Panasonic latest to disengage with telecom company

BRITISH chip designer ARM halted relations with Huawei Technologies Co Ltd to comply with a United States blockade of the company, potentially crippling the Chinese telecom company’s ability to make new chips for its future smartphones.

Huawei, like Apple Inc and Qualcomm , uses ARM blueprints to design the processors that power its smartphones. It also licenses graphics technology from the company, which is owned by Japan’s SoftBank Group Corp.

In another blow to the Chinese tech giant, Japanese conglomerate Panasonic Corp yesterday joined the growing list of global companies that have said they are disengaging with Huawei, the world’s second-largest seller of

smartphones and the largest telecom-gear maker.

Panasonic, which makes components used in smartphones and assembly lines, said it had stopped shipments of some components to Huawei. But the firm said it would still sell some components to Huawei, a point it made clear on its China website.

But ARM’s move will have a much bigger impact on Huawei’s ability to do business, particularly in the smartphone sector where the Chinese firm vies with Samsung Electronics Co Ltd for global leadership. ARM’s chip designs contain technology of US origin and are the backbone of Huawei handsets.

The US last week blocked Huawei from buying goods made from 25 per cent or more of USoriginated technologies or materials, accusing the firm of being a vehicle of Chinese state power and a potential threat to national security.

The sanctions are a major escalation in the bruising trade war between China and the US.

While the Chinese company denies the allegations, other countries such as Australia and New Zealand have blocked it from bidding for critical contracts due to national security concerns.

Washington is lobbying Britain not to use Huawei’s products, and yesterday, a South Korean newspaper reported similar pressure was being placed on Seoul.

China is South Korea’s biggest export market.

TSMC, the world’s biggest contract chipmaker, said yesterday its shipments to Huawei were not affected by the US order.

“We anticipate that there should be no major change when it comes to our chip shipment and technology support,” said TSMC spokesman Elizabeth Sun.

British mobile operators EE and Vodafone said on Wednesday they had dropped Huawei smartphones from the launch range of their 5G networks.

SoftBank’s low-cost mobile brand, Ymobile, and other Japanese telcos have said they will delay the launch of Huawei smartphones due to go on sale today.