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US is threatening Huawei’s global chip supply, China prepares for retaliation

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If things are not bad enough with the United States and China in the issue of technological dominance, the former is taking the issue a notch higher when it take steps that seek to block off Huawei’s essential hardware demand.

As per the US Department of Commerce amended export rule, Huawei is being prevented from accessing semiconductors that directly derive or produce from “certain US software and technology.”

The initiative comes in light with the still ongoing inclusion of Huawei to the alleged “entity list,” which essentially prohibits US companies from dealing with the world’s biggest telecomm hardware producer concerning both hardware and software.

Huawei’s “entity list” status is currently extended to last until 2021. Despite the ban, Huawei tried to circumvent the sanction by buying from different producers that essentially make use of US technology.

To counter this “loophole,” Washington is tightening its grip against the Chinese company by imposing a mandatory license from those aforementioned foreign companies before they would be “allowed” to deal with Huawei and its affiliates.

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While seemingly targeted at the giant Chinese manufacturer, the effect of the new rule will also be felt by others as well, including the Taiwan Semiconductor Manufacturing Company.

TSMC shares entrepreneurial ties with China over the production of chips via HiSilicon. HiSilicon is Huawei’s supplier of chips used for the company’s products, including the Honor phones and telecom equipment.

Along with the Taiwan Semiconductor Manufacturing Company, as many as 114 companies are expected to be affected as the new rule comes into effect. This is especially knowing that these many companies were effectively banned by the US, citing national security concerns.

In response, China is threatening the United States by putting pressure on US companies that rely on the country’s space and factories, namely Apple, CISCO, and Qualcomm. Furthermore, the communist country is also likely to suspend its acquisition of BOEING planes.

Making matters significantly worse for those that will affected by China’s restrictions is the Washington’s threat to impose additional taxes to US companies that operate their production abroad.

Source: Reuters

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