As Trump escalates US-China trade war, suppliers cut ties with Huawei
That is for fear of retaliation from the US administration, although the companies involved will inevitably suffer from impacting revenue cuts due to lost sales.
According to a recent report from Bloomberg, chipmakers such as Intel, Qualcomm, Xilinx and Broadcom have already taken that step, while Google is to cut off the supply of some of its software services as well as hardware to the Chinese mobile phone equipment maker.
Now, such an imposed ban on doing business with Huawei is likely not only to cripple the Chinese company accused of espionage but also the US economy as a whole, the newspaper notes.
Huawei has become the cheapest and most efficient provider of networking equipment including for the highly anticipated roll out of 5G wireless networks upon which ought to rely many upcoming technologies such as self-driving cars, smart cities and many new consumer-oriented applications where ultra-low latency fast connectivity to the cloud are a must.
Many of the above chip makers are increasing reliant on doing business with Huawei, but also hoping to access China as the world’s second largest economy. This trade war is also affecting European companies whose chips or systems occasionally contain IP from US companies. For example, German chip maker Infineon Technologies has reportedly stopped deliveries of products originating in the U.S. due to the new rules.
The company said it had adopted this measure to be on the cautious side and avoid potential litigations with the US, taking the time first to assess compliance issues with the US ban before potentially resuming shipments. That news alone reported by the Nikkei took a 6% toll on Infineon’s shares, and shares of other European companies such as STMicroelectronics or AMS were also hit.
Now if drying up the US supply chain were to effectively collapse Huawei, it would also directly affect China’s own 5G rollout and the global telecom network market, further impacting the country’s development.
To attenuate investors’ worries, Huawei claims it has nothing to do with espionage and has already started to develop its own chips to lessen the impact of the ban on its production, arguing it could eventually do without American chips. Korean smartphone maker Samsung seems to be the only true winner in this trade-war, retaining its strong ties with the US while winning market shares against its Chinese archrival.
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