Donald Trump has blacklisted Huawei. Google has already reacted by withdrawing Huawei’s license. Other US companies are also discontinuing deliveries to the Chinese. Now the US government has published a 90-day deadline as a kind of an emergency solution to ease the transition (read here the original text).
On one hand it must be seen that Huawei has so far been heavily dependent on US chip manufacturers. This US blockade could now lead to rapid emancipation. Huawei could try to switch to the Korean manufacturer Samsung and of course build its own operating system. But the dependence on the chips from the USA was so far very high. It will be exciting to see whether Huawei can continue to produce smartphones seamlessly beyond the chips available in its warehouses completely without US deliveries.
What does the current text of the US Commerce Department say? The 90-day deadline for example is intended to help operators of networks using Huawei products to find other suppliers. And existing users of Huawei mobile phones should still have support. This 90-day transitional solution does not apply to the use of US technology in “new products”. Citation:
“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks.”
So US manufacturers are no longer allowed to supply components for the production of new mobile phones. So manufacturers in the USA don’t have to pretend to stop supplying Huawei on their own. They are forced to do so anyway even now in this 90-day transition phase. Of course this primarily affects US chip manufacturers. Qualcomm and Broadcom the giants of the industry are likely to lose around five percent of their revenues.
After the 90 days the US government’s Huawei blockade is in effect anyway. And it doesn’t matter whether Donald Trump is followed by a new president who turns back the clock. The confidence of the Chinese in the reliability of the USA as a supplier of high-tech components for their final products should be gone. They should be working hard to find suppliers outside the USA and also outside the US zones of influence (i.e. also outside Europe).
What does that mean in the long run? Many US companies will lose sales. And they can’t just compensate for that with new business areas. We can be curious about the next quarterly figures of the US chip manufacturers and how they will comment on this topic. Their shares are unlikely to be overloaded with buy ratings in the near and distant future! Ergo: Open your eyes to chip stocks!