Ramped-up US restrictions on Huawei are likely to cut off the Chinese smartphone maker’s access to even off-the-shelf chips and disrupt the global tech supply chain once again, executives and experts cautioned.
The Trump administration on Monday expanded its curbs on Huawei and banned suppliers from selling chips made using US technology to the firm without a special licence — closing potential loopholes in its May sanctions that could have let Huawei access the tech via third parties.
The restrictions underscore the rift in Sino-US relations, at their worst in decades, as Washington presses governments around to world to squeeze Huawei out, alleging the company would hand over data 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, referring 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 division to keep making the chipsets that are key components in mobile phones.
For chip suppliers too, across regions, the ban could be a setback as most use US design software from Cadence Design Systems and Synopsys and chip-etching tools from firms including Applied Materials, experts said.
In Asia, memory chip makers including Korea’s Samsung Electronics and SK Hynix, Japanese image sensor maker Sony and Taiwanese chipset maker MediaTek may be affected, a chip industry source said.
Concerned
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 concerned about the restrictions and were reviewing them to see whether the company was affected.
It is still unclear how many major suppliers have licences or will need new ones to comply with these rules, or whether those licenses will be granted.
Samsung and Hynix declined to comment.
A Sony spokeswoman declined to comment, but pointed to the company’s comments earlier this month that 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 remain in compliance, but that it did not expect material impact to near-term operations, based on available information.
MediaTek stock slumped 10% on Tuesday, on track for its worst day since 2017, while smaller Huawei suppliers were down as well amid sluggish Asian stocks. Samsung shares were up 2%, and Sony and Hynix were down about 1%.
The ban is also likely to affect US companies such as Qualcomm and Intel <and other smaller chip makers in Asia and Europe.
Several questions remain about the how the new curbs will be implemented and how far the US commerce department intends 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 vendor 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. — Reported by Josh Horwitz and Hyunjoo Jin, with additional reporting by Brenda Goh, Makiko Yamazaki, Yimou Lee and Sayantani Ghosh, (c) 2020 Reuters
