Saturday, 28 November 2020

A lifeline for Huawei as US may grant chip suppliers licences

by Harry Baldock, Total Telecom
Thursday 29 October 20

The US sanctions earlier this year were a potentially lethal blow Huawei’s chip supply chain, but sources suggest that the US could be relenting, offering licences to chip makers to ship to Huawei so long as they do not supply equipment for 5G

A ray of light burst through Huawei’s troubled sky earlier today, with reports that the US may be preparing to grant semiconductor companies the licences they need to supply Huawei – provided that equipment is not related to 5G.   Anonymous sources from within the Asian semiconductor industry told the Financial Times that they are optimistic about their prospects in acquiring a licence from the US Department of Commerce…

A ray of light burst through Huawei’s troubled sky earlier today, with reports that the US may be preparing to grant semiconductor companies the licences they need to supply Huawei – provided that equipment is not related to 5G.
 
Anonymous sources from within the Asian semiconductor industry told the Financial Times that they are optimistic about their prospects in acquiring a licence from the US Department of Commerce, with one reporting that “chips for mobile devices are not a problem”.
 
While the allocation of these licences would still leave Huawei very much out in the cold when it comes to their 5G business, it does present a considerable olive branch for their smartphone business, which back in June had shipped 55.8 million phones, seizing the top spot from rival Samsung. It seems that the US is relatively content for Huawei to continue as a major player in the handset market, presumably since these devices themselves do not represent a threat to national security.
 
When the latest round of US sanctions back in August, Huawei began stockpiling chips related to its telecoms infrastructure business, reportedly banking a two-year supply. Since then, however, the company’s 5G prospects globally have been drying up considerably; numerous countries in Europe have directly or indirectly banned the company, the latest being Sweden, meanwhile the US is offering $1 billion in financial incentives for Brazil to ditch the Chinese supplier.
 
Even if these sanctions do begin to be relaxed as they relate to trade licences, their wider impact to the semiconductor industry itself cannot be underestimated. Recent reports suggest that the disruption to the Chinese tech supply chain caused by the sanctions is pushing the country to redouble efforts in the sector, with the government supporting the industry’s growth through investment and favourable tax policies. The country’s semiconductor industry is expect to grow to a level of domestic self-sufficiency within two years. 
 
While the tech gap between the US and China remains broad when it comes to semiconductors, the sanctions have created an environment where China has little choice but to bolster its domestic industry, something which could have long term connotations not only for Huawei but for the wider telecoms sector. 
 
 
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