Chip and phone supply chain shaken as Huawei faces mortal threat

Chip and phone supply chain shaken as Huawei faces mortal threat

  • New US sanctions bar Chinese telecom equipment maker from buying semiconductors

The global chip and smartphone industries are bracing for severe disruption after the US launched tougher sanctions against Huawei that some said could mean “death” for the company.

Washington said on Monday that no company worldwide would be allowed to sell semiconductors made using US software or equipment without a licence if Huawei was involved at any stage of the transaction.

The move closed a loophole in a May version of the rule that allowed Huawei to buy off-the-shelf chips if they were not custom-made to its designs.

Observers said given the dominance of US tools in certain segments of chipmaking, the new rule amounted to a blanket ban on any chip sales to Huawei, hitting its 5G equipment and handset businesses.

“We believe this step to significantly (almost completely) curtail Huawei’s ability to source any semiconductor from anyone,” Manish Nigam, head of Asian technology research at Credit Suisse, said in a research note.