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Another Hit to Huawei: the US Order Measures Against Chips Supply

By MBN Staff | Fri, 05/15/2020 - 19:59

The trade and technological war between the US and China does not stop, not even in the worst situations. This time, the blockade and restrictions that the Chinese company has to face increased in severity.

This morning, Donald Trump’s administration implemented new measures within this blockade and ordered to stop all the agreements that Huawei has with US semiconductors manufacturing companies and with any global company that makes chips using US technology. "We are tightening the rules to narrowly and strategically target the acquisition of Huawei semiconductors that are a direct product of certain software and technology in the US," the Commerce Department said in a statement.

With this shift in the rules, foreign companies that currently have US chip-making equipment will require an operating license from the US government before supplying chips to Huawei. Microsoft is one of the companies that is already filing a provisional permit with the Commerce Department, which grants it a license to continue selling chips to the Chinese company.

According to Bloomberg, these new rules would also affect Taiwan Semiconductor Manufacturing (TSMC), which supplies HiSilicon chips to Huawei, because in spite of being a Taiwanese company, it uses American software technology to manufacture its chips. Just yesterday, the Taiwanese company had announced that it would build a US$12 billion chip factory in Arizona in an attempt to maintain a good relationship with Donald Trump’s government.

"We are working to conduct a legal analysis and to ensure a thorough review and interpretation of these new standards. We hope to have the assessment completed before the effective date. The semiconductor industry supply chain is extremely complex and consists of a large number of international suppliers," TSMC said in a statement this morning.

The Counterattack

The Chinese government was quick to respond to the Trump administration's measures and said that "they were ready to put American companies on the 'unreliable entity list.'" This would affect companies like Apple, Cisco or Qualcomm.

Back in May 2019, the US did the same with Huawei. Back then, US Commerce Secretary Wilbur Ross explained the government's concern that Huawei poses a national security threat as its equipment could be used as a backdoor by the Chinese government to spy on Americans, allegations the company has repeatedly denied.

The data used in this article was sourced from:  
Bloomberg
Photo by:   Unsplash
MBN Staff MBN Staff MBN staff