US Tech Giants Cut Off Huawei
The US has increasing concerns that Huawei technology – coinciding with its fellow technology firm ZTE, a Chinese telecom company, could pose a risk and may be used as potential backdoor espionage by the Chinese government. Last week, president Donald Trump signed an executive order declaring a national emergency over ‘threats against information and communications technology and services’ to the U.S following this the Trump Administration added Huawei to a blacklist, which effectively prevents the company from buying parts and components from American companies without US government approval.
Sources have reported that several major chip makers, including Intel, Qualcomm, Xilinx, and Broadcom, had decided to cut their business with Huawei until further notice. These companies provided Huawei with key parts such as server chips as well as processors and modems for its smartphones.
The impact on Huawei, one of the world’s largest telecommunications equipment producer is not yet known, although various experts have expressed doubt with the company being restricted from business within the US.
The blocking of Huawei of critical components could also cause uncertainty within businesses dealing with 5G wireless networks worldwide, including China. This in turn could hurt the US companies that are increasingly reliant on the Chinese technology sector for growth. If fully implemented, the Trump Administration action could have global repercussions in the semiconductor industry. The US ban may cause China to delay its 5G network build until the ban is lifted, yet this will impact global component suppliers.
Huawei executives believe that their company has become a bargaining chip in the ongoing US-Chinese trade negotiations and the blacklist will be lifted once a final trade deal is reached. Last Thursday Huawei revoked against the Trump Administration for its decision and said a ban on its business in the US would only have negative repercussions to American interests and hinder the progression towards the deployment of 5G next generation mobile networks. The company also deemed Trumps blacklist as ‘unreasonable restrictions’, and could lead to serious legal battles in the near future.
The American companies’ moves are likely to escalate tensions between Washington and Beijing, as consumer confidence falls due to Trump’s goal of containing China, triggering a protracted cold war between the world’s biggest economies. This trade war has caused market volatility and pressured both allies and foes to avoid using Huawei for 5G networks that will essentially form the backbone of the modern economy.
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