The impact of the Trump administration’s threats to choke Huawei Technologies Co. Ltd reverberated across the global supply chain on Monday, hitting some of the biggest component makers.
Chipmakers including Intel Corp., Qualcomm Inc., Xilinx Inc. and Broadcom Inc. have told their employees they will not supply Huawei till further notice, according to people familiar with their actions. Alphabet Inc.’s Google cut off the supply of hardware and some software services to the Chinese giant, another person said, asking not to be identified. European semiconductor makers, however, said they would still keep on supplying to Huawei.
The Trump administration on Friday blacklisted Huawei—which it accuses of aiding Beijing in espionage—and threatened to cut it off from the US software and semiconductors it needs to make its products. The ban, which had been anticipated, hamstrung the world’s largest provider of networking gear and No. 2 smartphone vendor.
The impact of the ban also began to be felt outside the U.S. and Asia. Germany’s Infineon Technologies AG fell in early trading Monday after the Nikkei reported it halted shipments to the Chinese company in the wake of the US ban. Shares of STMicroelectronics NV and Austrian-based AMS AG were also hit.
Huawei said it will continue to provide security updates and sales services.
Blocking the sale to Huawei of critical components could also disrupt the businesses of American chip giants like Micron Technology Inc. and retard the rollout of critical 5G wireless networks worldwide—including in China. That in turn could hurt US companies that are increasingly reliant on the world’s second largest economy for growth.
If fully implemented, the US action could have ripple effects across the global semiconductor industry. Intel is the main supplier of server chips to the Chinese company, Qualcomm provides it with processors and modems for many of its smartphones, Xilinx sells programmable chips used in networking and Broadcom is a supplier of switching chips, another key component in some types of networking machinery. Representatives for the chipmakers declined to comment.
Huawei “is heavily dependent on US semiconductor products and would be seriously crippled without supply of key US components," said Ryan Koontz, an analyst with Rosenblatt Securities Inc. The US ban “may cause China to delay its 5G network build until the ban is lifted, having an impact on many global component suppliers."
Huawei’s $500 million bond due 2027 was indicated 0.3 cents on the dollar lower at 93.8 cents at 2pm in Hong Kong, according to Bloomberg-compiled prices. That’s after it posted a record drop of 2.4 cents on Friday. The ban’s commencement also walloped shares of Asian tech supply chain companies Monday. Sunny Optical Technology Group Co. was the worst performer on the Hang Seng Index, while Luxshare Precision Industry Co. dived 9.8% in Shenzhen.
To be sure, Huawei is said to have stockpiled enough chips and other vital components to keep its business running for at least three months. It’s been preparing for such an eventuality since at least the middle of 2018, hoarding components while designing its own chips, people familiar with the matter said. But its executives believe their company has become a bargaining chip in ongoing US-Chinese trade negotiations, and that they will be able to resume buying from American suppliers if a trade deal is reached, they said.
The US firms’ moves will likely escalate tensions between Washington and Beijing, elevating fears that President Donald Trump’s goal is to contain China. In addition to a trade fight that has rattled markets for months, the US has pressured allies and foes to avoid using Huawei for 5G networks that will form the backbone of the modern economy.
The US clampdown is a direct blow to Huawei’s mobile division. Huawei will only be able to access the public version of Google’s Android operating system. It won’t be able to offer proprietary apps and services, from Maps and search to Gmail, said the person, who requested anonymity. That will severely curtail the sale of Huawei smartphones abroad, though it’s unclear when those apps—which are popular mainly outside of China—will become unavailable.
Huawei, the world’s largest smartphone brand after Samsung Electronics Co., was one of a select few global hardware partners to receive early access to the latest Android software and features from Google. Outside of China, those ties are critical for the search giant to spread its consumer apps and bolster its mobile ads business. The company will still have access to app and security updates that come with the open-source version of Android. CEO and founder Ren Zhengfei had said on Sunday he expected that US restrictions wouldn’t hurt his company’s growth much.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.