Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.
U.S. President Donald Trump’s administration is reportedly taking additional steps to sever Huawei’s access to critical technology by revoking or rejecting licenses to some of the Chinese tech giant’s key suppliers.
Reuters broke the news on Sunday, citing “people familiar with the matter.” A spokesperson at Huawei declined to comment on the report to Coins2Day and could not confirm whether or not the company’s suppliers would be forced to cut ties with Huawei.
After the Reuters report published Sunday, stocks for chip makers and manufacturers across Asia fell on Monday in a sign that investors are losing confidence that companies will be able to continue supplying Huawei with chips and other components it desperately needs.
The U.S.-Huawei Chip war
The new action against Huawei ban is only the latest in a string of harsh measures the Trump administration has taken against the tech giant it characterizes as a national security threat. (Huawei denies the allegation.)
In May 2020, Trump’s administration banned Taiwanese chip giant, the Taiwan Semiconductor Manufacturing Corporation, from supplying Huawei with semiconductor chips. In August, the U.S. Department of Commerce went further, saying that any chip manufacturer globally would have to apply for a license from the U.S. In order to continue supplying Huawei with chips.
The U.S. Has the power to dictate which companies supply Huawei with semiconductors because virtually all chipmakers rely, at least in part, on American technology to produce their products.
The U.S. Actions against Huawei in 2020 effectively starved Huawei of the components it needs to make smartphones.
“Huawei’s mobile phones have no chip supply,” Richard Yu, CEO of Huawei’s consumer business group, said in August 2020. Yu also acknowledged that the U.S.’s attacks on Huawei’s chip supplies amounted to “a huge loss” for the company.
The U.S., however, did not completely restrict Huawei from accessing chips. In September, the U.S. Reportedly provided licenses to American chipmakers like Intel and AMD to continue selling Huawei chips.
Falling stocks
The U.S.’s latest broadside against Huawei, which has reportedly been in effect since at least Friday, appears to be a more comprehensive ban on Huawei chip suppliers.
The U.S. Commerce Department reportedly revoked up to eight licenses from four companies supplying Huawei. The U.S. Commerce Department also may deny a “significant number” of license requests from other companies, the U.S.’s Semiconductor Industry Association told Reuters.
In its report, Reuters specifically named two companies that may be barred from selling Huawei chips: American chipmaker Intel and the Japanese flash memory chipmaker Kioxia. Neither firm is listed on Asian markets (and U.S. Markets are closed Monday), but stocks fell for other firms that either sell chips to Huawei or were hoping to do so in the future.
On Monday, the share price for Samsung Electronics, the South Korean technology giant, fell by over 2%. Samsung Electronics had applied for a license to supply Huawei with chips without a response from the U.S., while its subsidiary, Samsung Display, reportedly received approval from American authorities in October to sell Huawei its display panels.
The share price for Advantest Corporation, a Japanese chip parts manufacturer, also fell by nearly 1.5% on the Tokyo stock exchange. In Taiwan, Mediatek, a contract chip manufacturer, saw its share price slide by over 3% on Monday morning, before recovering to a 1% loss by mid-afternoon on the Taiwan stock exchange.
Shares for Shin Etsu Chemical, a Japanese chemical maker that supplies chipmakers, also dropped by nearly 3% on the Tokyo stock exchange on Monday.
Overall, Asian markets were mostly lower on Monday. In Japan, the Nikkei 225, an index that tracks the top stocks in Tokyo, ticked down 1%. The South Korean KOSPI index also fell 2.3%, while Taiwan’s TAIEX lost.03%.
For now, it is unclear whether President-elect Joe Biden’s administration will continue to enforce the U.S.’s harsh measures against Huawei after he takes office on Jan. 20. But industry experts believe that Biden’s approach may be similar to Trump’s.
“It is clear to us there is continued muscular approach to China in the cards [with the Biden administration], John Neuffer, head of the U.S.’s Semiconductor Industry Association, told The Washington Post, in November.
