US Huawei ban set to take effect

In preparation for ban, Huawei has been stockpiling several chip inventories since end of 2018

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Huawei logo at Shenzhen International Airport (Reuters photo)

Huawei logo at Shenzhen International Airport (Reuters photo)

TAIPEI (Taiwan News) — The world’s largest smartphone and telecom equipment maker, Huawei Technologies, could find doing business a bit more difficult starting on Tuesday (Sept. 15).

After midnight on Sept. 14, all non-American suppliers around the globe will have to stop shipping to China’s Huawei Technologies if their products contain U.S. technology. Suppliers who want to continue to do business with the Chinese tech company will need a license from the U.S. Commerce Department, according to Nikkei Asian Review. In preparation for the ban, Huawei has been stockpiling several chip inventories since the end of 2018.

The company, which has more than 190,000 employees and revenue over US$124 billion, may find it harder to keep talent, and reports indicate that it has already lost hundreds of staff to rivals. Rival tech companies, including Apple, Samsung, Xiaomi, Oppo, Vivo, Ericsson, and Nokia stand to gain market share.

Last May, Washington placed Huawei on its Entity List, to limit its use of U.S. technologies, requiring its American suppliers to obtain government approval to ship to the Chinese telecoms company, while in May of this year, restrictions were expanded to include non-U.S. manufacturers from assembling any products for the Chinese company and its chip designing branch HiSilicon if they used American equipment. In August, the U.S. restricted all suppliers using American technologies from doing business with Huawei without a license.

After being placed on the Entity List, some U.S. companies, including Intel and Qualcomm received licenses from Washington to resume business with Huawei for some products. Taiwan’s MediaTek, Samsung Electronics, Samsung Display, and SK Hynix have also reportedly applied for licenses, while Taiwan Semiconductor Manufacturing Company (TSMC) has not.

While Huawei did overtake Samsung in the second quarter to become the world’s largest smartphone maker, it faces significant difficulties going forward. On Aug. 7, Huawei announced that it will no longer be able to produce its advanced Kirin chipsets for its flagship Mate 40 after Sept. 15 due to the U.S. ban.

In terms of Huawei’s 5G business, the company has at least one year of inventories. It controls around 28 percent of the telecom equipment market. However, if it can no longer sustain sales, competitors like Samsung, Nokia, Ericsson, NEC, and Fujitsu could benefit at Huawei’s expense, the report said.

As Huawei races to get in last-minute orders, many tech suppliers have seen increased August sales. MediaTek’s monthly sales rose 42 percent year-on-year, just as Novatek, a display integrated circuit driver chips supplier, reported a jump of more than 30 percent in monthly revenue, and TSMC grew 16 percent on the year, the report found.

Taiwan’s overall electronics component exports to China reported 30 percent growth year-over-year in June, July, and August, Nikkei Asian Review reported.

With the U.S. presidential election around the corner on Nov. 3, it is unclear if the situation for Huawei will change. While President Trump has taken a hardline with China, questions remain at this point as to how a Biden presidency would deal with Beijing.