A WhatsApp message l received said that in retaliation, Huawei closed its 57 plants in the US, and I thought, Huh 57!??!! It added that 1 million Americans marched in protest in mid April. Huh, n the coronavirus pandemic? 😂😂😂
Published: 6:00am, 23 May, 2020
Many of the companies Beijing needs for its US$1.4 trillion tech infrastructure plan were put on Washington’s trade blacklist last October.
The new rule requires all foreign semiconductor companies using US origin technology to obtain a waiver to do business with Huawei.
In a bid to challenge the US as the world’s tech superpower, China plans to invest US$1.4 trillion over the next five years to build 5G wireless networks and develop AI software for applications such as autonomous driving, automated factories and mass surveillance.
The programme, slated for approval by the National People’s Congress meeting in Beijing this month, is the linchpin of Chinese President Xi Jinping’s goal of making the country less dependent on foreign technology.
Trouble is, there’s a fatal flaw. Unless the money is spent developing something to replace silicon-based semiconductors, it will see China’s tech industry become more dependent on the US, not less.
To see why, look no further than the ongoing campaign by Washington to blunt the rise of Chinese telecoms champion Huawei Technologies, which the US considers a national security threat.
Last week Washington closed a loophole used by Huawei to skirt a ban on its use of US technology, including semiconductors and software, after it was put on the so-called Entity List in May last year. The new rule introduced last week requires all foreign semiconductor companies using US origin technology to obtain a waiver to do business with Huawei.
How can the US wield such extraterritorial power? Similar to how the greenback’s role as a de facto global currency allows Washington to police financial transactions around the globe, US dominance in silicon-based semiconductors allows it to do something similar in hi-tech.
Silicon chips – and the equipment, materials and processes required to design and manufacture them in high volume – were invented in the US.
If the US-China tech war escalates, Washington has the option of shutting off access to chip design and manufacturing technology to all Chinese tech firms, not just Huawei – though such a move would be very costly for US tech companies that rely on China for sales of these products.
In retaliation for blocking Huawei’s access to TSMC, Beijing is said to be considering its own “unreliable foreign entities” list. There is speculation that Apple and US chip makers Qualcomm and Micron Technology are on the list. All three companies rely on the Chinese market for a significant portion of their sales – more than half, in Micron’s case.
In a world where China’s tech champions cannot survive without US core technology – at least for the foreseeable future – and where American tech companies depend on the Chinese market for a large portion of their profits, which side would have the upper hand in a conflict? Regardless, it would be a pyrrhic victory.
Craig Addison is a production editor on the Post’s tech desk in Hong Kong. From 2002 to 2009 he worked for SEMI, the Silicon Valley-based trade group representing semiconductor equipment and materials companies. @craigaddison
Published: 8:14am, 22 May, 2020
New US export control rule could be Washington’s most damaging attack yet against Huawei, the world’s largest telecommunications equipment vendor.
It would block HiSilicon’s access to US chip design software and major semiconductor foundries, led by TSMC.
Read the article:
Trump bets the farm on Huawei equipment ban
US president opts for so-called nuclear option to stop Chinese telecom giant’s rollout of 5G mobile broadband
By DAVID GOLDMAN
MAY 21, 2020
After a failed two-year campaign to stop China’s Huawei Technologies from leading the world’s rollout of 5G mobile broadband, the Trump Administration announced the so-called nuclear option, asserting control over sales of computer chips made anywhere in the world with US equipment.
Silicon Valley firms like LAM and Applied Materials provide high-end fabrication equipment to the chip-fabrication giants who manufacture the chips that Huawei designs, and the US rule announced Friday could shut off Huawei’s access to the top-of-the-line chips it buys from Taiwan Semiconductor Manufacturing Corp (TSMC).
The ban may apply not only to the high-end chips that Huawei buys from Taiwanese fabricators for its high-end smartphones and servers, but also to radio frequency devices that power its 5G base stations.
That might hold back China’s US$170 billion internal rollout of 5G and hamper Huawei’s network building elsewhere, according to industry experts.
If China retaliates by shutting US tech companies out of the Chinese market, the outcome will be a collapse of trans-Pacific technology trade, aggravating what already is the worst economic downturn since the Second World War.
Both sides will suffer, perhaps gravely. The dispute has the potential to escalate into an all-out trade war that would push the world into depression.
In the medium term, China will build substitutes for US equipment. China buys nearly 60% of the world’s semiconductors, and the loss of the Chinese market would cripple the American semiconductor industry.
The new US rules pushes the world into uncharted territory. Semiconductors drove the digital transformation of the world economy, and their design and manufacture combines technology from thousands of firms in dozens of countries.
The next shoe to drop will come from Beijing, which is mulling retaliatory sanctions against US companies like Apple, Qualcomm, Boeing and Cisco. Chinese leader Xi Jinping did not handle the initial phase of the epidemic well and suffered a significant loss of prestige. He cannot afford to be humiliated by the United States, and will respond in kind.
It’s possible that Huawei’s 5G rollout in Europe will be set back by a year or more, giving Washington more time to think up an alternative. But it’s also possible that the US semiconductor industry will be the odd man out, as the rest of the world finds alternatives to US technology.
Washington is betting the farm on the hope that China and its partners won’t find a workaround in time. If they do, the new restrictions will be America’s last hurrah as a tech power. Ten years ago China would have been helpless. But during the past decade Chinese universities have muscled their way up to world class, thanks in large part to the return of tens of thousands of Chinese with doctorates from American universities.
China’s tech industry has the depth and breadth to attack the whole range of semiconductor production issues. Throughout the escalating Sino-American tech war, the Chinese have come up to speed faster than either Washington or the industry consensus expected.
The risk is that the US might lose the crown jewels – its leadership in semiconductor technology. That’s why the Trump Administration hesitated to impose a third-party export ban earlier.
China meanwhile is considering its response. From the Chinese side of the board, elementary game theory indicates a maximalist response designed to inflict extreme damage on the already-weakened US economy.
The Chinese English-language daily wrote May 17: “Some industry analysts believed that a counterstrike against US companies like Qualcomm and Apple might prompt them to lobby against such restrictions as their interests in the Chinese market are important for maintaining their sustainable growth. For instance, 65% of Qualcomm’s total revenue lay in China, according to media reports in August 2019.”
For the whole article:
May.20 — The U.S. has increased restrictions on the Chinese telecom giant Huawei, banning any chipmaker using American equipment from supplying gear to the company. Andy Purdy, Huawei chief of security, discusses the restrictions with Emily Chang on “Bloomberg Technology.”
Why new U.S. rules on selling chips to Huawei could be a ‘big blow’ for the Chinese tech giant
PUBLISHED MON, MAY 18 20201:29 AM EDT
UPDATED MON, MAY 18 20207:59 AM EDT
Washington’s latest rules require foreign manufacturers using U.S. chipmaking equipment to get a license before being able to sell semiconductors to Huawei.
That will hit Taiwan’s TSMC which supplies over 90% of Huawei’s smartphone chips, hitting the Chinese giant’s nearly $67 billion consumer business.
Huawei has looked to diversify its chip production to Chinese firm SMIC. However, analysts said that SMIC does not have the expertise or capacity to produce all of the chips Huawei requires.
The United States’ latest move to restrict chip sales to Huawei could be a big blow to the Chinese technology giant, hitting its two biggest businesses and offering very little wriggle room for the firm to find alternative suppliers.
Billions of dollars of revenue are at risk from Washington’s latest rule which requires foreign manufacturers using U.S. chipmaking equipment to get a license before being able to sell semiconductors to Huawei. There is no indication that the U.S. will grant licenses either.
Huawei said in its first comments on the issue that it “categorically opposes” the U.S.’s chip regulation.
“Nevertheless, in its relentless pursuit to tighten its stranglehold on our company, the U.S. government has decided to proceed and completely ignore the concerns of many companies and industry associations,” the company said in a statement.
“This decision was arbitrary and pernicious, and threatens to undermine the entire industry worldwide. This new rule will impact the expansion, maintenance, and continuous operations of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries.”
It added that its business “will inevitably be affected.”
Washington’s latest rule will give it power in determining what semiconductors Huawei can get its hands on.
“The US government will have full global authority in interpreting what chip items Huawei will be able to access going forward,” China Renaissance said in a note published Monday.
That’s a big deal. Chips are critical for a huge swathe of Huawei’s products from its base stations required for 5G networks to its smartphones. Huawei designs semiconductors for its products via a division of the company called HiSilicon. But the actual manufacturing of those chips is done by Taiwan’s TSMC, one of the companies that stands to be most affected by the new U.S. rules. TSMC uses American-made equipment to manufacture those chips.
US-China trade enters new era after overnight Huawei, Foxconn and TSMC announcements
There has been a steady drumbeat of news on the U.S.-China trade front since the start of the Trump administration. President Trump has made decoupling from China’s economy on on-again, off-again proposition. There was the trade conflict with weekly changes in American tariff policy, the threats against ZTE and Huawei, the responses from China against Qualcomm and NXP and the launch of new restrictions on China investment in U.S. startups and telecom infrastructure.
Overnight, there were three critical stories that are going to reshape U.S.-China trade for the foreseeable future, with plenty more stories lurking beneath the surface.
First, you have the announcement this morning from the Department of Commerce that the Trump administration is going to ban Huawei from using U.S. software and hardware in certain strategic semiconductor processes, a move designed to limit the leading Chinese chip manufacturer from growing its market power and technological capabilities. Earlier yesterday, the administration also announced an extension to the government’s export ban on Huawei and ZTE.
Second, you have a major announcement overnight from TSMC — the world’s largest chip foundry and one of the only foundries that can handle the manufacturing of the most advanced chips — that the Taiwanese company will invest and launch a major, $12 billion factory in Arizona. The release says that the factory will be capable of producing the world’s most advanced 5-nanometer chips when it launches in a couple of years. The announcement came after weeks of debate in Washington aimed at cutting off TSMC’s ability to build chips for mainland Chinese companies like Huawei — a move that TSMC argued would dramatically hurt its profitability and ability to invest in further R&D.
Third, you had the announcement this morning that Foxconn’s profits dived 90% due to COVID-19 and declining smartphone shipments. Foxconn, a Taiwanese hardware assembly company (among many other things), has been caught in the smoldering U.S.-China trade conflict, and even attempted at one point to build its own $10 billion manufacturing facility in Wisconsin with Trump’s felicity only to scuttle that plan entirely in an embarrassing setback.
Yet, the real interesting dynamic to watch is going to be Taiwan, which is home to strategically critical sectors of the chip industry. TSMC’s announcement accepts the reality of decoupling, but attempts to work around it by recoupling the United States to the safety of Taiwan. Taiwanese companies and the island’s politicians have avoided ceding its technology to other countries, creating a dependence that they have hoped would protect the island in the event of a mainland Chinese invasion. After all, if the Pentagon can’t get its chips, it’s going to have to intervene, or so the thinking holds.
In this new world though, TSMC building an American factory doesn’t undermine that narrative, it actually strengthens the bonds between the U.S. and Taiwan. More jobs, more trade, more travel and, ultimately, a deeper appreciation of the importance of each other. The question is how far the Trump administration is willing to go here. Taiwan is bidding to rejoin the World Health Organization, where it was an observer up to 2016. How deep are those ties? Will the U.S. go beyond its own diplomatic framework to intensely push for Taiwan’s reentry in spite of Chinese opposition?
That’s what is next, but what is clear today is that the world of semiconductors, of internet infrastructure, of the tech ties that have bound the U.S. and China together for decades — they are frayed and are almost gone. It’s a new era in supply chains and trade, and an open world for new approaches to these huge existing industries.
This is a 2018 article
Apr 19, 2018,10:36pm EDT
Analyst: China’s Huawei To Exit U.S. Market
Following Huawei’s annual analyst summit held this week in its hometown of Shenzhen, China, we now believe that the U.S. market is no longer part of the world’s largest telecommunications equipment manufacturer global strategy.
Not interested in the U.S. market anymore
“There are things we cannot change its course, and it’s better not to put it on top of your mind,” said Eric Xu, Huawei’s “rotating” CEO during the event. “In this way, we have more energy and time to serve our customers, and to build better products to meet the needs of our customers. In some cases, just let it go and we’ll feel at ease.”
The retrenchment comes amid repeated calls by U.S. officials to ban products from Huawei and ZTE, determined to be a risk to national security.
Latest round of layoffs underway, mainly affecting U.S. workers
What it means, in practice, is that Huawei will quickly scale down its U.S. operation (sales, marketing and support).
According to its website, Huawei USA is headquartered in Plano, Texas, and employs about 1,200 people across 13 regional offices, including Silicon Valley, Bridgewater, New Jersey, Chicago and San Diego.
However, we estimate that about 200 jobs are directly related to Huawei’s U.S. activity.