Sunday 25 August 2019

Blacklist: Supply chains rattled as US hits Huawei suppliers

Trade war: US President Donald Trump
Trade war: US President Donald Trump
A man walks past surveillance cameras displayed at a Huawei booth in Tianjin

Sijia Jiang and Michael Martina

The latest US broadside against Huawei that puts the Chinese firm on an exports blacklist threatens to rattle the global tech supply chain, linked closely to the $105bn business of the world's top supplier of telecoms network equipment.

The Trump administration has said it would add Huawei Technologies and 70 affiliates to its 'Entity List' - a move that will likely ban the firm from acquiring US components and technology without government approval, adding another incendiary element to the US-China trade war.

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The ban is not yet effective.

A similar US ban on China's ZTE Corp had almost crippled business for the smaller Huawei rival early last year before the curb was lifted.

Such sanctions on Huawei are, however, likely to have ramifications beyond the company itself, analysts said.

It would disrupt Huawei's business at a minimum and all but put it out of business in an extreme, while its US suppliers would also be hit, they said.

Out of $70bn Huawei spent for component procurement in 2018, some $11bn went to US firms including Qualcomm, Intel Corp and Micron Technology, and they could see that revenue disappear.

On the other hand, US companies like Apple face the risk of severe retaliation from China, a key market.

"This is going to be very messy," a China-based source at a US company said.

It will be tough for Huawei too, the person said, noting none of its US suppliers "can be replaced by Chinese ones, not within a few years, at least. By then, they are already dead".

Reuters

Irish Independent

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