New US restrictions on Huawei will further entangle the supply chain.
Increased U.S. restrictions on Huawei are likely to cut off the Chinese smartphone maker’s access to even chips already on the market and disrupt the technology’s global supply chain once again, executives and experts warned.
The Trump Administration on Monday extended its restrictions on Huawei and banned suppliers from selling chips made with American technology to the Chinese company without a special license, thus closing possible loopholes in its May sanctions that could have allowed Huawei access to the technology through third parties.
The restrictions underscore the breakdown of relations between Beijing and Washington, which have reached their worst moment in decades, with the White House pressuring states around the world not to hire Huawei, claiming that the company would hand over data to the Chinese government.
Huawei denies spying for China.
“It will have a huge impact,” said Gu Wenjun, chief analyst at Shanghai-based consultancy ICWise, referring to the tighter restrictions in the United States. “It will thwart Huawei’s plans to source chips by buying them from third parties, rather than from HiSilicon.”
For chip vendors in other regions, the ban could also be a setback, as most use American design software from Cadence Design Systems and Synopsys and chip engraving tools from firms such as Applied Materials (NASDAQ: AMAT), they said. The experts.
In Asia, memory card makers including South Korea’s Samsung Electronics (KS: 005930) and SK Hynix (KS: 000660), Japanese image sensor maker Sony (T: 6758), and Taiwanese chip maker MediaTek could be affected, said an industry source.
The source, an employee of a large Asian technology provider who declined to be named due to media disclosure rules, said the company’s management was concerned about the restrictions, which they were studying to determine whether to apply. would be affected.
It is not yet clear how many of the major vendors have or will need new licenses to meet these standards, or whether such licenses will be granted.
Samsung and Hynix declined to comment.
A Sony spokeswoman also declined to comment, but pointed to the company’s statements earlier this month announcing that it would cut its three-year sensor investment plan to adjust to the changing environment of the smartphone market.
MediaTek said it was studying the new rule changes to continue to comply with its provisions, but did not expect a substantial impact on its operations in the short term, in light of the information available.
Shares of MediaTek fell 10% on Tuesday, heading to their worst day since 2017, while Huawei’s small suppliers also fell on bearish Asian stocks. Shares of Samsung were up 2%, while Sony and Hynix were down about 1%.
The ban is also likely to affect US companies such as Qualcomm (NASDAQ: QCOM) and Intel (NASDAQ: INTC), and other small chipmakers in Asia and Europe.
Several unknowns remain about how the new restrictions will be implemented and to what extent the US Department of Commerce will push to require knowledge of any transaction that could be carried out on behalf of Huawei or a subsidiary included in the Washington blacklist political risk consultant Eurasia Group said in a note.
A semiconductor vendor “would potentially be required to know where all of their products end up so that they are not involved in any transaction where a Huawei associate may be a buyer, intermediate consignee, end consignee or end user,” they said. Eurasian analysts.