SAN FRANCISCO — Despite Huawei’s bluster and assertions by its founder that the U.S. has underestimated the Chinese telecommunications giant, the short- to medium-term impact of being cut off from the supply of U.S. chips and other components is likely to be severe, with some observers going so far as questioning whether Huawei can remain viable.
Longer term, however, some analysts believe that it is U.S. suppliers who will feel the pain most acutely as China responds to the ban on U.S. companies selling chips and other components to Huawei by redoubling efforts to become self-reliant and placing heightened emphasis on sourcing components from suppliers based in Europe and elsewhere in Asia.
Trump’s Order Sets Stage for Banning Huawei Gear
“If you look at electronic systems companies in China — smartphone companies or whoever — basically all of their future designs for as far as we can see for probably decades out now, when they go to do a new design for a system, they are going to be looking at non-U.S. parts,” said Bill McClean, president of IC Insights, in an interview with EE Times.
McClean said that going forward, Chinese systems suppliers will choose an alternative to a part offered by a U.S. company if the alternative is at all viable. If, for example, Texas Instruments has a part that competes with parts from companies such as STMicroelectronics, NXP Semiconductors, or Renesas Electronics, the Chinese company is going to go with one of the other vendors, McClean said.
“They’re going to avoid U.S. suppliers any chance they get going forward, even if this thing is settled tomorrow,” McClean said. “The fear of God has been put into them, and so they are going to be looking at South Korean companies, Japanese companies, and European companies, and if there is an alternative, they are going to pick it. I guarantee that. The trust is gone.”
Handel Jones, CEO of International Business Strategies, told EE Times that the ban on supplying Huawei is going to encourage an already-significant effort underway in China to become self-reliant. The Chinese government has already pumped billions into bolstering its domestic semiconductor production in recent years and is planning to invest more than $160 billion over 10 years in order to reduce its reliance on foreign semiconductors to supply its massive domestic semiconductor market.
“Longer term, what we see is a fairly significant effort to become independent of the U.S.,” Jones said. He estimates that China could be completely independent of U.S. chips in as soon as three to five years, as long as it still has access to TSMC or rival foundry Samsung Electronics.
According to Goldman Sachs, at least 70 American firms have significant exposure to Huawei. Most U.S. chipmakers, including Intel, Qualcomm, Xilinx, and Broadcom, have stopped supplying Huawei to comply with the U.S. government export ban. Non-American companies including Japan Display, Toshiba, and TSMC have reported checking their supply chains for restricted American technology. (TSMC later announced that it would continue supplying wafers to Huawei subsidiary HiSilicon through the rest of this year.)
Read the rest of this article on EBN sister site EETimes by clicking here.