Economy

Trump Huawei ban ripples across industry as supplies halted

Huawei smartphone/Bloomberg

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The ban, which had been anticipated, hamstring the world’s largest provider of networking gear and number smartphone vendor.

Tuesday 21, May 2019

(Bloomberg) --The impact of the Trump administration’s threats to choke Huawei Technologies reverberated across the global supply chain, hitting some of the biggest component-makers.

Chipmakers including Intel, Qualcomm as well as Xilinx and Broadcom have told their employees they will not supply Huawei till further notice,

Alphabet’s Google has cancelled the supply of hardware and some software services to the Chinese giant.

The Trump administration 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.

Huawei said it will continue to provide security updates and sales services to customers using Google’s Android operating system.

Blocking the sale to Huawei of critical components could also disrupt the businesses of American chip giants like Micron Technology 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 and Qualcomm provides it with processors and modems for many of its smartphones

Additionally, Xilinx sells programmable chips used in networking and Broadcom is a supplier of switching chips as well as a key component in some types of networking machinery.

Huawei “is heavily dependent on US semiconductor products and would be seriously crippled without a 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 is said to have stockpiled enough chips and other vital components to keep its business running for at least three months, the company has been preparing for such an eventuality since at least the middle of 2018, hoarding components while designing its own chips.

TAGS : Huawei, President Donald Trump, US-China Trade war

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