U.S. moves to cut Huawei off from global chip suppliers as China eyes retaliation

[rooster59]

U.S. moves to cut Huawei off from global chip suppliers as China eyes retaliation

By David Shepardson, Karen Freifeld and Alexandra Alper

 

FILE PHOTO: The Huawei logo is seen on a communications device in London, Britain, January 28, 2020. REUTERS/Toby Melville

 

WASHINGTON (Reuters) - The Trump administration on Friday moved to block global chip supplies to blacklisted telecoms equipment giant Huawei Technologies [HWT.UL], spurring fears of Chinese retaliation and hammering shares of U.S. producers of chipmaking equipment.

 

A new rule, unveiled by the Commerce Department and first reported by Reuters, expands U.S. authority to require licenses for sales to Huawei of semiconductors made abroad with U.S. technology, vastly expanding its reach to halt exports to the world's No. 2 smartphone maker.

 

"This action puts America first, American companies first, and American national security first," a senior Commerce Department official told reporters in a telephone briefing on Friday.

 

Huawei, the world's top telecoms equipment maker, did not respond to a request for comment.

 

News of the move against the firm hit European stocks as traders sold into the day's gains, while shares of chip equipment makers such as Lam Research <LRCX.O> and KLA Corp <KLAC.O> fell around 5% and 3%, respectively, in U.S. trading.

 

The reaction from China was swift, with a report on Friday by China's Global Times saying Beijing was ready to put U.S. companies on an "unreliable entity list," as part of countermeasures in response to the new limits on Huawei.

 

The measures include launching investigations and imposing restrictions on U.S. companies such as Apple Inc <AAPL.O>, Cisco Systems Inc <CSCO.O> and Qualcomm Inc <QCOM.O>, as well as suspending purchases of Boeing Co <BA.N> airplanes, the report said https://www.globaltimes.cn/content/1188491.shtml, citing a source.

 

The Commerce Department's rule, effective Friday but with a 120-day grace period, also hits Taiwan Semiconductor Manufacturing Co Ltd <2330.TW>, the biggest contract chipmaker and key Huawei supplier, which announced plans to build a U.S.-based plant on Thursday.

 

TSMC said on Friday it is "following the U.S. export rule change closely" and working with outside counsel to "conduct legal analysis and ensure a comprehensive examination and interpretation of these rules."

 

The department said the rule is aimed at preventing Huawei from continuing to "undermine" its status as a blacklisted company, meaning suppliers of U.S.-made sophisticated technology must seek a U.S. government license before selling to it.

 

"There has been a very highly technical loophole through which Huawei has been in able, in effect, to use U.S. technology with foreign fab producers," Commerce Secretary Wilbur Ross told Fox Business News on Friday, calling the rule change a "highly tailored thing to try to correct that loophole."

 

The company was added to the Commerce Department's "entity list" last year due to national security concerns, amid accusations from Washington that it violated U.S. sanctions on Iran and can spy on customers. Huawei has denied the allegations.

 

Frustration among China hawks in the administration that Huawei's entity listing was not doing enough to curb its access to supplies prompted an effort, first reported by Reuters in November, to crack down on the company that culminated in Friday's rule.

 

Washington lawyer Kevin Wolf, a former Commerce Department official, said the rule appeared to be a "novel, complex expansion of U.S. export controls" for chip-related items made with U.S. technology abroad and sent to Huawei. But he stressed that chips designed by companies other than Huawei and manufactured with U.S. technology could still be sold to the company without the license requirement.

 

While the new rules will apply to chips regardless of their level of sophistication, a senior U.S. State Department official who also briefed reporters Friday opened the door to some flexibility for the company, echoing reprieves granted to Huawei by the Trump administration previously.

 

"This is a licensing requirement. It does not necessarily mean that things are denied," the official said, adding that the rule gives the U.S. government greater "visibility" into the shipments. "What are done with those applications, we'll have to see ... Each application will be judged on its merits."

 

After essentially barring Huawei from buying from U.S. suppliers, the Commerce Department granted licenses to some of Huawei’s biggest U.S. partners to continue to sell to the company, while also allowing smaller rural telecoms companies to continue to purchase Huawei equipment to keep their networks up and running.

 

Huawei, which needs semiconductors for its smartphones and telecoms equipment, has found itself at the heart of a battle for global technological dominance between the United States and China, whose relationship has soured in recent months over the origins of the deadly coronavirus.

 

While the rule change is aimed at squeezing Huawei and will hit the chip foundries it relies on, U.S. manufacturers of chipmaking equipment could face long-term pain, if chipmakers develop new equipment sources beyond the reach of U.S. rules.

 

But for now, most chipmakers rely on equipment produced by U.S. companies such as KLA, Lam Research and Applied Materials <AMAT.O>, which did not respond to requests for comment.

 

While some of the complex tools required to make chips come from companies outside the United States, such as Japan's Tokyo Electron <8035.T> and Hitachi <6501.T> and the Netherlands' ASML <ASML.AS>, analysts say it would be difficult to put together an entire toolchain for making advanced semiconductors without at least some American equipment.

 

The burden of dealing with the new rule is most likely to be felt by foundries such as TSMC that buy the tools, rather than U.S. semiconductor firms such as Qualcomm Inc <QCOM.O> or Nvidia Corp <NVDA.O> that tap such foundries as part of their supply chain.

 

"We are concerned this rule may create uncertainty and disruption for the global semiconductor supply chain, but it seems to be less damaging to the U.S. semiconductor industry than the very broad approaches previously considered," Semiconductor Industry Association Chief Executive John Neuffer said in a statement.

 

(Reporting by David Shepardson, Karen Freifeld and Alexandra Alper; additional reporting by Stephen Nellis, Ben Blanchard and David Kirton Editing by Lincoln Feast, Steve Orlofsky and Daniel Wallis)

 

-- © Copyright Reuters 2020-05-16

 

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[unamazedloso]

"unreliable entity list," ???? Put China on that list. I USED to import a lot from China for buisness. Every monthly shipment was different, missing something, etc... 

[FritsSikkink]

2 minutes ago, unamazedloso said:

"unreliable entity list," ???? Put China on that list. I USED to import a lot from China for buisness. Every monthly shipment was different, missing something, etc... 

So you better improve your vendor checklist then.

[Tug]

Message to trump we have enough problems allready without you creating more so you can throw some meat to your base let’s focus on the problems at hand ehh?

[ExpatOilWorker]

Good move. It is scary how far China will go to cheat their way in.

 

The Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies  ["https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies"]

[Puchaiyank]

China has been stealing intellectual property and military secrets for decades...US is complicit in allowing China to run amok in order to get to their markets...

 

The cost is too high...China can not be trusted!

[Boon Mee]

32 minutes ago, Puchaiyank said:

China has been stealing intellectual property and military secrets for decades...US is complicit in allowing China to run amok in order to get to their markets...

 

The cost is too high...China can not be trusted!

"Do not trust China. China is <deleted>" 

 

MAGA 

[Mama Noodle]

1 hour ago, rooster59 said:

A new rule, unveiled by the Commerce Department and first reported by Reuters, expands U.S. authority to require licenses for sales to Huawei of semiconductors made abroad with U.S. technology, vastly expanding its reach to halt exports to the world's No. 2 smartphone maker.

 

Seems reasonable enough. The Chinese cheat, lie, and steal their way into every market possible. Protecting US Tech is a no-brainer, and limiting Chinese state-run spying is also a no-brainer. 

 

But But But Trump though, Im sure. 

[marqus12]

for 40 years they whose moving production of everything to china
and the media in various countries praised what a good solution it is
now they are shouting oy vey, oy vey
comedy
this world is ruled with little wisdom
 
 

[gearbox]

1 hour ago, ExpatOilWorker said:

Good move. It is scary how far China will go to cheat their way in.

 

The Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies  ["https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies"]

It is scary how big fat lies are rehashed and reposted again. This story got totally ridiculed and rebuked by the experts, and even Tim Cook called it "100% lie"

 

 

 

[grumbleweed]

How to screw American business and impress people 101. 

Obviously the Chinese will not have seen this coming and I'm sure this will inspire faith in any company considering doing business with US companies. The USA hegemony is all but dead and Vlad the lad's mission accomplished,

 

God bless China, don't interfere with foreign governments, tap their leaders phones, and try to keep wars down to a minimum, and we'll get along fine. You're the change the world has been waiting for.

 

 

Edited May 16, 2020 by grumbleweed

[Isaan sailor]

So liberals can buy themselves Huawei phones--seems fair.  CCP won't bother to spy on them...

[ExpatOilWorker]

1 hour ago, gearbox said:

It is scary how big fat lies are rehashed and reposted again. This story got totally ridiculed and rebuked by the experts, and even Tim Cook called it "100% lie"

 

 

 

Do you have anything to back that claim up?

[franzs]

3 hours ago, Puchaiyank said:

China has been stealing intellectual property and military secrets for decades...US is complicit in allowing China to run amok in order to get to their markets...

 

The cost is too high...China can not be trusted!

yea sure, that's the brain wash the US is doing since decades, 

the US is also a master stealing intellectual property and military secrets world wide, wake up....

 

the days the US as world leader are gone..... 

especially with a leader like Trump

  

[pmarlin]

4 hours ago, Tug said:

Message to trump we have enough problems allready without you creating more so you can throw some meat to your base let’s focus on the problems at hand ehh?

Think about this, maybe the problem is China.

[phkauf]

Huawei is a very convenient pressure point for the US to use to press China. It is one of the most prestigious Chinese companies (basically the Chinese Apple), but they have blatantly stolen and copied from Apple and other Western companies. While Huawei is so-called private and ownership details are murky, it's generally accepted that the government and government officials (Xi and friends) have a significant stake in the company. This is one way for Trump to get Xi's attention without being completely in his face about it. Every time the US puts some pressure on Huawei the Chinese scream like a dentist poking a raw nerve - it's quite obvious what's going on here.

Trump has re-written the playbook for dealing with China from the previous three administrations which hoped bringing China into the WTO would reform their behavior - didn't work at all. Business interests were too afraid to confront China when they stole technology, ignored trademarks and blatantly copied products. The legal system in China is useless and the threat of lost business (and imprisonment) are all too real for companies to complain. I think many US and Western business are secretly rooting for this new approach and Trump is proven correct every single day as China continues to abuse its power (see Australia recently).

 

 

[userabcd]

5 hours ago, Tug said:

Message to trump we have enough problems allready without you creating more so you can throw some meat to your base let’s focus on the problems at hand ehh?

Yes, since 2016 there has been nothing but turmoil created by him and his regime.

[mistral53]

1 hour ago, ExpatOilWorker said:

Do you have anything to back that claim up?

https://www.macworld.com/article/3310613/apple-strongly-denies-bloombergs-chinese-hacking-report.html

[userabcd]

Notice a lot of accusations and propaganda against China being purported by the US and others, but very little actual and factual physical evidence being divulged.

 

Just like the US justifying their invasion of Iraq in 2003 when General Colin Powell made his presentation at the UN in front of the whole world.

Edited May 16, 2020 by userabcd

[2 is 1]

So most people here thinking China has much more technology knowledge than in Great USA have!

How other way is possible that they can spy on you whit every product what they bring in your Great coundry!?

 

[earlinclaifornia]

My last company was sharing the same contract manufacturer in the Philippines. That product line was radios.

We felt that the Chinese government was financing there costs. The contract manufacturer bought us out prior to us going bankrupt. Huawei did manage to replace them by bring the technology back to home to China. The contract manufacturer went bankrupt. 

[Estrada]

The U.S. intelligence Agencies are frightened that if the U.K., the Europeans and Asean Countries are using HuaWei equipment and 5G, they will no longer be able to hack confidential messages and phone calls with the UK and European Prime Ministers as they have been caught doing in the past!

Edited May 16, 2020 by Estrada

[JulesMad]

5 hours ago, Puchaiyank said:

China has been stealing intellectual property and military secrets for decades...US is complicit in allowing China to run amok in order to get to their markets...

 

The cost is too high...China can not be trusted!

Right, however I trust China a LOT more than ever-lying usa. How can you trust a 'democratic' country that have the BIGGEST idiot in history as their president?!?

[Estrada]

1 hour ago, phkauf said:

Huawei is a very convenient pressure point for the US to use to press China. It is one of the most prestigious Chinese companies (basically the Chinese Apple), but they have blatantly stolen and copied from Apple and other Western companies. While Huawei is so-called private and ownership details are murky, it's generally accepted that the government and government officials (Xi and friends) have a significant stake in the company. This is one way for Trump to get Xi's attention without being completely in his face about it. Every time the US puts some pressure on Huawei the Chinese scream like a dentist poking a raw nerve - it's quite obvious what's going on here.

Trump has re-written the playbook for dealing with China from the previous three administrations which hoped bringing China into the WTO would reform their behavior - didn't work at all. Business interests were too afraid to confront China when they stole technology, ignored trademarks and blatantly copied products. The legal system in China is useless and the threat of lost business (and imprisonment) are all too real for companies to complain. I think many US and Western business are secretly rooting for this new approach and Trump is proven correct every single day as China continues to abuse its power (see Australia recently).

 

 

The United States industrial revolution was also founded on copying and stealing mainly British and European inventions that were also subject to Patent and/or copyright. Now the U.S. are complaining about China. The latest is the N95 facemask which was copied from the facemack invented by the Chinese Manchurian Army. U.S. companies have copied inventions of my own and other European Companies and even managed to get U.S. Patents on the copied products.

[natway09]

And God forbid that the US cheats, lies & spies

[Relocated]

4 minutes ago, JulesMad said:

Right, however I trust China a LOT more than ever-lying usa. How can you trust a 'democratic' country that have the BIGGEST idiot in history as their president?!?

Mostly the biggest idiots seating in the white house in USA. Jimmy Carter, Reagan, George Bush, Obama, etc. but the country runs fine not like other countries with heroic figures like China, Thailand, etc. That is the strength of US not weakness.  

[Eric Loh]

Let’s see whether Trump will put the money where his mouth is and see this through. Let him be remembered for losing US chip leadership position in the industry to South Korea. China will just buy more from Samsung if the ban is in place or Taiwan and domestically. China is the world’s chip import market. When US loses its leadership position, it will also lose the motivation to innovate and will force them to depend on foreign semiconductor suppliers. Trump is an idiot in foreign affairs. 

 

 

[pegman]

WMD  déjà vu all over again! Somebody better tell the farmers to hold off planting those soybeans.  Sure seems like Donald Hoover wants to run that country into the ground before he gets the boot. 

[ChouDoufu]

so it goes like this.....

 

intel and samsung and others can make chips, lots of chips, and sell to china.  china can use zillions of them in the huawei and oppo and xiaomi cellphones they make.  they can install them in their 5G base stations.  if the nsa likes their backdoors, they can keep their backdoors!  western tech firms make billions in profit, and the trade deficit is that much smaller.

 

winning!

 

or we can ban their sales to china.  china will find other vendors or begin to produce their own chips.  will they steal the technology?  why not, if we won't sell to them.  (and even if we do, right?)  so intel and samsung and others lose those sales.  the trade deficit is that much bigglyer. 

 

china can advertise "100% guaranteed nsa-backdoor-free" 5G tech, something ms. merkel would surely appreciate.  they'll still undercut western cellphone prices, will still retain market share, only now without western chips.  next we can ban use of android in their phones, and china will develop their own operating system and create their own "ecosystem" using their own talent and the unemployed HB-1 coders that trump wants to send back to india.  with the yuuuuuge market share huawei already has, google/android will lose out bigly.

 

winning?

 

i'll bet trump's next chess move will be banning sales of gmo soybeans to the chinese.

[fruitman]

3 hours ago, franzs said:

6 hours ago, Puchaiyank said:

China has been stealing intellectual property and military secrets for decades...US is complicit in allowing China to run amok in order to get to their markets...

 

The cost is too high...China can not be trusted!

yea sure, that's the brain wash the US is doing since decades, 

the US is also a master stealing intellectual property and military secrets world wide, wake up....

 

the days the US as world leader are gone..... 

especially with a leader like Trump

  

Chinese also stole a lot of info from ASML , the world's largest chipmaker....in Holland. Now Trump ordered holland to not sell the chinese the latest computer chips...

 

https://www.ed.nl/asml/diefstal-asml-kennis-begon-met-twee-slimme-chinezen~ab8f8d84/?referrer=https://duckduckgo.com/

Edited May 16, 2020 by fruitman