The Trump administration on Friday moved to ban shipments of semiconductors to Huawei Technologies from global chipmakers, Reuters reports.
The U.S. Commerce Department said it was amending an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.” The department said its “announcement cuts off Huawei’s efforts to undermine U.S. export controls.”
The rule change is a blow to Huawei, the world’s no. 2 smartphone maker, as well as to Taiwan’s Taiwan Semiconductor Manufacturing Co Ltd, a major producer of chips for Huawei’s HiSilicon unit as well as mobile phone rivals Apple Inc and Qualcomm Inc. TMSC announced late Thursday it would build a $12 billion chip factory in Arizona.
“The Chinese government will not just stand by and watch Huawei be slaughtered on the chopping board,” Huawei Chairman Eric Xu told reporters on March 31.
The United States is trying to convince allies to exclude Huawei gear from next generation 5G networks on grounds its equipment could be used by China for spying. Under the rule change, foreign companies that use U.S. chipmaking equipment will be required to obtain a U.S. license before supplying certain chips to Huawei, or an affiliate like HiSilicon. In order for Huawei to continue to receive some chipsets or use some semiconductor designs tied to certain U.S. software and technology, it would need to receive licenses from the Commerce Department.
Commerce Secretary Wilbur Ross told Fox Business “there has been a very highly technical loophole through which Huawei has been in able, in effect, to use U.S. technology with foreign fab producers.” Ross called the rule change a “highly tailored thing to try to correct that loophole.”
This week, President Donald Trump extended for another year a May 2019 executive order barring U.S. companies from using telecommunications equipment made by companies deemed to pose a national security risk, a move seen aimed at Huawei and peer ZTE Corp.
China is ready to take a series of countermeasures against a US plan to block shipments of semiconductors to Chinese telecom firm Huawei, including putting US companies on an “unreliable entity list,” launching investigations and imposing restrictions on US companies such as Apple and suspending the purchase of Boeing airplanes, a source close to the Chinese government told the Global Times.
“China will take forceful countermeasures to protect its own legitimate rights,” if the US moves forward with the plan to bar essential suppliers of chips, including Taiwan-based TSMC, from selling chips to the Chinese tech giant, the source told the Global Times in an exclusive interview.
The measures include adding related US companies to China’s “unreliable entity list,” imposing restrictions on or launching investigations into US companies like Qualcomm, Cisco and Apple according to Chinese laws and regulations like Cybersecurity Review Measures and Anti-monopoly Law, and suspending airplane purchases from Boeing, said the source.
The US companies mentioned including Apple, Qualcomm, Cisco and Boeing are all highly dependent on the Chinese market.
MacDailyNews Take: COVID-19 will produce many paradigm shifts; business as usual with China among them. This Huawei ban and China’s threat of retaliation is but one action. More to come, we expect.
China’s failure to adequately inform the world of the extent of the COVID-19 threat in a timely fashion has wreaked widespread, unnecessary death and unimaginable economic damage globally from which it will take years to recover.
Decades of rampant IP theft by China don’t help, either. Alongside South Korea, China is the land of iPhone knockoffs.
In February, CEO Tim Cook said Apple wouldn’t make any quick moves out of China in light of interruptions due to the coronavirus and called the situation a “temporary condition.”
We’re talking about adjusting some knobs, not some sort of wholesale, fundamental change. – Tim Cook, February 2020
File under: “Things in need of a rethink.”
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