Huawei will use its own chips against United States ban

Jeannie Matthews
May 21, 2019

Three differences remain between the two countries, according to China.

HiSilicon, which mainly designs chips for Huawei equipment, made the comments in a letter to staff attributed to President He Tingbo dated "the small hours of May 17", shortly after the United States officially banned Huawei from buying us technology without special approval from the federal government.

It comes just days after US President Donald Trump placed Huawei and 70 of its affiliates on a blacklist that would require US firms to request a license before selling components to the Chinese firm. Ltd., the world's largest telecom equipment maker, on a blacklist that could make it extremely hard to do business with USA companies.

The developments surrounding Huawei come at a time of trade tensions between Washington and Beijing and amid concerns from the United States that Huawei's smartphones and network equipment could be used to spy on Americans, allegations the company has repeatedly denied.

If the USA blocks the sale to Huawei of critical components such as semiconductors, it could cripple Huawei's businesses, depress the business of American chip giants from Qualcomm (NASDAQ:) Micron Technology Inc (NASDAQ:)., and potentially disrupt the rollout of critical 5G wireless networks around the world.

President Capital Management Corp (統一投顧) analysts led by Charlie Yeh (葉修劼) said that Huawei also does business with Elite Advanced Laser Corp (聯鈞光電) and PCL Technologies Inc (眾達科技) in the optical communications sector, and buys networking products from Gemtek Technology Co (正文科技) and Alpha Networks Inc (明泰科技).

Although the US Secretary of State Pompeo (who had previously been criticised in the Chinese media in an unprecedented way!) and China's Secretary of State Wang Ji have phoned on the weekend.

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What happened: Chinese chipmaker HiSilicon said it has always been prepared for a situation in which its parent company Huawei could one day be unable to obtain chips and technologies from the United States.

NORTHAM: Now dozens of USA suppliers will have to apply for a license if they want to do business with Huawei. If the Commerce Department issues the license, USA suppliers would still need separate licenses to conduct new business with Huawei, which would be extremely hard to obtain, the spokeswoman said.

Now Google has announced that it will more or less discontinue its business relations with Huawei: this applies to Android updates, components, but also to Gmail and above all the Google Play Store.

Huawei also depends heavily on USA suppliers. Expressing confidence in the company's long-term outlook, he said the annual revenue growth might undershoot by 20 per cent, Japan's Nikkei Asian Review reported.

The U.S firms' software is considered gold standard, used by manufacturers globally to flawless chip blueprints and test them before committing them to physical silicon, where a single mistake can set back a chip for months. "Today, by a historical decision, all the backups we developed in the past become the first choices overnight", she wrote.

China's Huawei bought $70 billion worth of components and parts previous year from 13,000 suppliers.

The person gave an example that Huawei and its subsidiaries use chip-design software from Cadence Design Systems Inc. and Synopsys Inc., both based in California and leaders in the global market. "Cadence and Synopsys pretty much have all the ground covered for anything you would need".

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