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Taiwan's MediaTek claims insignificant impact as US squeezes Huawei

As major processor supplier to Huawei, MediaTek's share prices plummeted on Tuesday

MediaTek's headquarters in Hsinchu (Hsinchu Science Park website photo)

MediaTek's headquarters in Hsinchu (Hsinchu Science Park website photo)

TAIPEI (Taiwan News) — MediaTek issued a statement during Tuesday's (Aug. 18) trading session that the new restrictions on Huawei will not significantly impact its business in the short term after the Taiwanese company's share prices nosedived to the daily limit on the nation's stock exchange.

The U.S. is placing further restrictions on China's Huawei Technologies to limit the company's access to commercially available chips that use U.S. technologies, including electronic design automation (EDA). The new rules expand the access ban to 38 Huawei affiliates to bring the total to 152.

MediaTek was originally seen to be the biggest beneficiary from the US-China tech trade war, as it was set to become the largest processor supplier to Huawei. Monday's new U.S. restrictions now put that position in jeopardy.

Rumors have circulated that the Taiwanese company has been pressured to reduce its 5G chip supply to the Chinese company. The new round of restrictions starting Monday is said to stop MediaTek and other Taiwanese chip suppliers from shipping chips using EDA technology and will likely affect the growth momentum of Huawei.

The Taiwanese company's statement reads that there will be no significant impact on its short-term operations. The statement was issued during the trading session, but it still failed to rally investor confidence as the stock slumped by the daily trading limit of 10 percent on Tuesday.

Foreign institutional investors' view on MediaTek has been mixed. One brokerage has lowered its rating on the company from "buy" to "hold," while another maintains a "buy" for MediaTek on 5G optimism despite Huawei's uncertainty, reported Cnyes.