Sun Sentinel Palm Beach Edition
Huawei hampered by additional US sanctions
HONG KONG — The latest U.S. sanctions on tech giant Huawei threaten to devastate the company and escalate a feud with China that could disrupt technology industries worldwide.
Huawei Technologies Ltd. is one of the biggest makers of smartphones and network equipment, but that $123 billion-a-year business is in jeopardy after Washington announced further restrictions on use of American technology by foreign companies that make its processor chips.
Huawei spent the past year scrambling to preserve its business after an earlier round of U.S. restrictions imposed last May cut off access to American components and software.
“Our business will inevitably be impacted,” Huawei’s chairman, Guo Ping, said this week.
The company said it would need some time to “understand the impact” of the latest restrictions.
The conflict is politically explosive because Huawei is a national champion among industries the ruling Communist Party is promoting in hopes of transforming China into a global competitor in profitable technologies.
On Monday, China’s Ministry of Commerce warned it will protect “the legitimate rights and interests of Chinese enterprises,” but gave no details of potential retaliation. Beijing has threatened in the past to issue an “unreliable entities list” that might restrict operations of American companies in China.
Huawei is at the center of the U.S.-Chinese conflict over Beijing’s technology ambitions, which Washington worries might erode American industrial leadership.
Huawei has few alternatives if Washington refuses to allow its suppliers to use U.S. technology. The company has developed some of its own chips but even the biggest non-U.S. manufacturers such as Taiwanese giant TSMC need American components or production equipment.
“Every electronics system that Huawei produces could be negatively impacted,” Jim Handy, semiconductor analyst for Objective Analysis, said in an email. “Most China-based alternatives haven’t yet been established.”
New curbs announced last week are the third round of sanctions aimed at cutting off Huawei’s access to U.S. technology and markets.
In a statement, Huawei criticized the U.S. decision as “arbitrary and pernicious” and warned it will affect operation and maintenance of networks installed by the company in more than 170 countries.
The Trump administration says Huawei is a security risk, which the company denies, and is trying to persuade European and other allies to shun its technology for next-generation telecom networks.
Chinese officials accuse Washington of raising phony security concerns to hurt a rising competitor to American tech companies.
The potential impact extends far beyond Huawei. The company spends tens of billions of dollars a year on components and technology from U.S. and other suppliers, purchases that might be disrupted if output of smartphones and other products is blocked.