US Huawei ban ripples across industry as supplies halted
May 21 2019 12:32 AM
The Huawei Technologies logo sits on the company’s exhibition stand at the Viva Technology conference in Paris on May 16. Huawei said it will continue to provide security updates and sales services to customers using Google’s Android operating system, according to a company statement yesterday.

Bloomberg /San Francisco

The impact of the Trump administration’s threats to choke Huawei Technologies Co reverberated across the global supply chain yesterday, hitting some of the biggest component-makers.
Chipmakers including Intel Corp, Qualcomm Inc, Xilinx Inc and Broadcom Inchave told their employees they will not supply Huawei till further notice, according to people familiar with their actions.
Alphabet Inc’s Google cut off the supply of hardware and some software services to the Chinese giant, another person familiar said, asking not to be identified discussing private matters.
The Trump administration on Friday 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. The ban, which had been anticipated, hamstring the world’s largest provider of networking gear and No 2 smartphone vendor.
The impact of the ban also began to be felt outside the US and Asia. Germany’s Infineon Technologies AG fell in early trading yesterday after the Nikkei reported it halted shipments to the Chinese company in the wake of the US ban. Shares of STMicroelectronics NV and Austrian-based AMS AG were also hit.
An Infineon spokesman said that the majority of products it delivers to Huawei are not subject to US restrictions, adding that the chipmaker can “make adaptions in our international supply chain.” AMS also said that it had not suspended shipments to Huawei. Huawei said it will continue to provide security updates and sales services to customers using Google’s Android operating system, according to a company statement yesterday.
Blocking the sale to Huawei of critical components could also disrupt the businesses of American chip giants like Micron Technology Inc 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, Qualcomm provides it with processors and modems for many of its smartphones, Xilinx sells programmable chips used in networking and Broadcom is a supplier of switching chips, another key component in some types of networking machinery. Representatives for the chipmakers declined to comment.
Huawei “is heavily dependent on US semiconductor products and would be seriously crippled without 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’s $500mn bond due 2027 was indicated 0.3 cents on the dollar lower at 93.8 cents at 2pm in Hong Kong, according to Bloomberg-compiled prices. That’s after it posted a record drop of 2.4 cents on Friday. The ban’s commencement also walloped shares of Asian tech supply chain companies yesterday. Sunny Optical Technology Group Co was again the worst performer on Hong Kong’s Hang Seng Index, while Luxshare Precision Industry Co dived as much as 9.8% in Shenzhen.
To be sure, Huawei is said to have stockpiled enough chips and other vital components to keep its business running for at least three months. It’s been preparing for such an eventuality since at least the middle of 2018, hoarding components while designing its own chips, people familiar with the matter said. But its executives believe their company has become a bargaining chip in ongoing US-Chinese trade negotiations, and that they will be able to resume buying from American suppliers if a trade deal is reached, they said.
The American companies’ moves are likely to escalate tensions between Washington and Beijing, elevating fears that President Donald Trump’s goal is to contain China, triggering a protracted cold war between the world’s biggest economies. In addition to a trade fight that has rattled global markets for months, the US has pressured both allies and foes to avoid using Huawei for 5G networks that will form the backbone of the modern economy.

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