Huawei To Be Cut Off From Global Chip Suppliers as Tensions Between US and China Continue to Rise

As tensions continue to rise between the US and China, President Donald Trump continues to add fuel to the fire. As of Friday, the US president has targeted Huawei Technologies by putting a halt on shipments of semiconductors from various global chipmakers.

The US Commerce Department has decided to change the rule on exports, which will then diminish the availability of semiconductors necessary for Huawei’s production of telecom equipment and smartphones. Prior to the rule change, the Chinese tech company has been using US technology and software in the design and production of its semiconductors, even though it has been placed on the US economic blacklist.

With the new change of rules, international companies utilizing US technology in the production of semiconductors will have to receive a special US license from the Commerce Department before they can supply Huawei with the necessary inputs. However, the parts which are currently in production or in the process of being shipped are exempt from the new rule change if they are completed in the next 120 days.

Also in Friday, the Commerce Department issued an extension for a temporary licence which grants US rural wireless network companies business opportunities with Huawei. However, this extension is only valid until August 13, with no plans for any further extensions.

According Commerce Department’s Secretary Wilbur Ross, the rule amendment is a response to some of Huawei’s alleged activities that are are apparently posing a risk to America’s foreign policy interests as well as national security.

Information for this briefing was found via CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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