Huawei troops see dire threat to future from latest Trump salvo

The Trump administration’s new Foreign-Produced Direct Product Rule is a surgical strike levelled at Huawei’s chip design firm, HiSilicon

HiSilicon’s chips are essential in products waiting to be shipped out, including Huawei’s smartphones and equipment for 5G networks

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Employees of Huawei Technologies walk along the hallway of a building at the telecommunications equipment maker’s headquarters in Shenzhen on May 19. Photo: Agence France-Presse

Published: 10:19am, 8 Jun 2020Updated: 10:19am, 8 Jun 2020

The Trump administration has fired multiple salvoes against Huawei Technologies since the start of a campaign to derail China’s technological ascendancy. The latest blow threatens to cripple the country’s largest technology champion.

Huawei’s leafy campus in southern China has been engulfed in a state of emergency since the Commerce Department in May banned the sale of any silicon made with US know-how – striking at the heart of its semiconductor apparatus and aspirations in fields from artificial intelligence (AI) to mobile services. Its stockpiles of certain self-designed chips essential to telecommunications equipment will run out by early 2021, according to people familiar with the matter.

Executives scurried between meetings in the days after the latest restrictions, according to one person who attended the discussions. But the company has so far failed to brainstorm a solution to the curbs, the people said, asking not to be identified talking about private matters.

While Huawei can buy off-the-shelf or commodity mobile chips from a third party like Samsung Electronics or MediaTek, it could not possibly get enough and may have to make costly compromises on performance in basic products, they said.

What Huawei’s brass fears is that Washington, after a year of Entity List sanctions that have failed to significantly curtail the company’s rapid growth, has finally figured out how to quash its ambitions. The latest curbs are the culmination of a concerted assault against China’s largest technology company that began years ago, when the White House tried to cut off the flow of American software and circuitry; lobbied allies from Britain to Australia to banish its network gear; even persuaded Canadian police to lock up the founder’s daughter, Meng Wanzhou.

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