Trump has blocked Chinese tech giant Huawei from using advanced semiconductors on his devices.
President Donald Trump has intensified the protracted feud between the US and the Chinese tech giant Huawei.
After months of tense back and forth between the parties, Trump has blocked Huawei from using advanced semiconductors on his devices.
The equipment needed to manufacture these chips is in the U.S. Available only from companies, so it is not officially possible for Trump to sell any company that uses this American technology to Huawei.
The move has angered the tech giant and the Chinese government and is likely to send shock waves across the industry.
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This leads to a “nuclear option.”
Last May, Huawei, a key competitor in the US technology industry, was added to the blacklist for security reasons. The Trump administration set barriers to the company’s access to U.S. components and software.
Huawei was still dealing with damage when the U.S. government began to force other countries to ban Huawei’s 5G networking equipment. Also, California-based Google has withdrawn its contract with Huawei, which will include its search engine in a new line of phones.
Hostility to Huawei is deeply driven by geopolitical concerns. The Chinese government has promoted Huawei because it wants to compete in the telecommunications industry globally, much to the chagrin of President Trump.
China and its ruling Communist Party are frequent targets of US presidential slander, and Huawei’s expansion into the international market does not sit well with Trump’s “US-first” foreign and economic policy.
Trump’s contempt for Huawei has reached a fever pitch amid the coronavirus epidemic, which he tried to blame on the Chinese.
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His decision to halt Huawei operations this week comes at a time when Trump is attempting to mobilize his base against China for fewer reports of COVID-19 at the beginning of the crisis.
On Friday, Secretary of Commerce Wilbur Ross pointed out that the announcement was made before the announcement, citing US security concerns as a driving force for impending restrictions.
“We must amend and prevent U.S. laws on Huawei and Heil Seacon’s exploitation, and prevent U.S. technologies from doing bad things that are contrary to U.S. national security and foreign policy interests,” Ross said.
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Huawei President Guo Ping responded, “The US is improving its technological power to crush companies outside its borders. We expect our business to be inevitable. We will try our best to find a solution.”
Tensions were high before the incident, Huawei executives warned in a statement, “The Chinese government will not stand by and watch because of the assassination of the Huawei cutting board.”
Huawei currently has a one-year inventory of advanced chips, which means it only has a few months to do it right with the US or find a supplier of the necessary equipment.
Meanwhile, Taiwan Semiconductor Manufacturing Company or DSMC is exploring its legal options. Huawei is next to its second-largest customer, Apple. DSMC is the sole supplier of Huawei products.
The Taiwanese company is trying to maintain relations with the two countries, but if the United States is to remain in control, it must acknowledge the tremendous success it has had at its base.
Huawei may try to move away from DSMC custom chips and buy generic chips instead. This will require a major change in its technical design and business strategy, which will prevent it from becoming a stronger competitor in the next few years.
There are other, broader potential consequences for this situation. The US and Chinese governments may come to a compromise, which US tech companies find disruptive to their sales models and force the government to make amends.
On the other hand, unless there is no compromise, China can start looking at its solutions, which could reinforce the Asian superpower’s long-term presence in tech.
However, the US could be wise to consider the potential consequences of China allowing technology to rise without US involvement. It might wise to broker a deal to slow the rise of a potential adversary.