For Huawei, it may really run out of inventory as it appears that it does not have an option to explore. The latest ban includes all 38 subsidiaries of Huawei on the entity list. Regarding the new regulations, this is the most stringent means to crack down on Huawei. This is because the new amendment directly restricts Huawei from purchasing chips (and other parts, components, or equipment) developed or produced using American software or technology. Every purchase requires permission from the United States, which actually amounts to prohibiting purchases.
In response to the above-mentioned new regulations, on August 17th, John Neuffer, Chairman and CEO of the American Semiconductor Industry Association (SIA), issued a statement on its official website, stating that they are still evaluating the rules. However, extensive restrictions on the sale of commercial chips will cause serious damage to the industry. The statement reads
“We are still reviewing the rule, but these broad restrictions on commercial chip sales will bring significant disruption to the U.S. semiconductor industry. We are surprised and concerned by the administration’s sudden shift from its prior support of a more narrow approach intended to achieve stated national security goals while limiting harm to U.S. companies. We reiterate our view that sales of non-sensitive, commercial products to China drive semiconductor research and innovation here in the U.S., which is critical to America’s economic strength, and national security.”
According to SIA, it represents 95% of the US semiconductor industry. The regular spokesperson of the Chinese Ministry of Foreign Affairs, Zhao Lijian, said at today’s press conference that the United States has generalized the concept of national security, abused national power, and adopted various restrictive measures against Chinese companies such as Huawei without any real evidence. “This is a naked hegemonic act, and we will continue to take necessary measures to safeguard the legitimate rights and interests of Chinese companies”.
The U.S. decision on Huawei is not a surprise
Jefferies analysts wrote in a report: “The United States is surprisingly blocking the loopholes in its direct product rules. This is not entirely a surprise. This means that Huawei can not rely on third-party chip design companies such as MediaTek and Unisoc to continue to produce mobile phones. The shattered hope also puts Huawei at risk of survival.”
On August 7th, Yu Chengdong said that due to US sanctions, Huawei’s world-leading Kirin series chips cannot be manufactured after September 15th.
Yu Chengdong said that in the past ten years, Huawei’s exploration in the field of chips has changed from seriously backward, relatively backward, leading, to being blocked. “We have invested huge research and development, but unfortunately, in the field of semiconductor manufacturing, Huawei did not participate. We only do chip design, not chip manufacturing. Many of our very powerful chips cannot be manufactured. We said that to solve these problems, technology is needed…”