Europe’s chip makers are vulnerable in US fight with Huawei

These chip makers face a potentially greater threat to business if China chooses to retaliate against the US by targeting one of their most important clients, Apple

A chunk of the components made by European chip makers, such as STMicroelectronics and AMS, end up in Huawei’s smartphones

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A worker of Infineon Technologies, one of Europe’s largest semiconductor companies, displays some of the German firm’s products. Chip makers Infineon, STMicroelectronics, AMS and Dialog Semiconductor are assessing the latest US government sanctions against Huawei Technologies. Photo: AP

Published: 1:57pm, 27 Aug 2020Updated: 5:20pm, 27 Aug 2020

European semiconductor makers do not rely heavily on US know-how for the chips they supply to Huawei Technologies. They could still take a hit from Washington’s tightening restrictions on the Chinese telecommunications equipment maker.

The US Commerce Department said last week it will require foreign companies to obtain a licence if they want to supply Huawei with products based on certain American technology.

A chunk of the components made by European chip makers, such as STMicroelectronics and AMS, end up in Huawei’s smartphones. Production of those handsets is likely to be disrupted if their other components do use US parts or intellectual property.

“If Huawei can’t source other parts for their phones, then it is fair to assume that STMicro could see a revenue hit of up to 6 per cent,” brokerage Liberum said in an emailed reply to questions from Bloomberg.

As Huawei struggles to find alternatives to US chip tech, it finds itself a pawn in a much bigger power game

Europe has been caught in the middle of escalating tensions between the US and China, with countries in the bloc forced to balance ties with an important security ally and a global trading partner. Britain has decided to ban Huawei from future wireless infrastructure following intense pressure from Washington.

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