US chipmakers hit after Trump blacklists Huawei

Increased pressure on Huawei comes days after US trade war with China escalated sharply

A Huawei logo at an exhibition during the World Intelligence Congress in Tianjin, China, on Thursday. Photograph:  Jason Lee/Reuters

A Huawei logo at an exhibition during the World Intelligence Congress in Tianjin, China, on Thursday. Photograph: Jason Lee/Reuters

 

Shares in some of Huawei’s biggest US suppliers fell on Thursday after the Trump administration ratcheted up attacks on the Chinese tech group.

The White House and US department of commerce took steps on Wednesday night that would in effect ban Huawei from selling technology into the US market, and could also prevent it from buying semiconductors from suppliers including Qualcomm in the US that are crucial for its production.

US chipmaker Qualcomm, which earns about 5 per cent of its revenues from Huawei, saw its share price drop almost 4 per cent to $83.08 by lunchtime in New York on Thursday despite a broadly positive market. Shares in Broadcom, another supplier, fell 2.5 per cent.

The Information Technology Industry Council, which represents Huawei suppliers Qualcomm, Intel and Microsoft, raised concerns about the US action and urged the administration to “work with industry” to minimise the fallout.

The US department of commerce said it would put Huawei on its so-called Entity List, meaning that the American companies will have to obtain a licence from the US government to sell technology to Huawei. At the same time, US president Donald Trump signed an executive order declaring the US telecoms sector faced a “national emergency” – giving the commerce department the power to “prohibit transactions posing an unacceptable risk” to national security.

Raising tariffs

The increased pressure on Huawei comes just days after the US trade war with China escalated sharply, with Mr Trump raising tariffs on Chinese imports to 25 per cent and Beijing retaliating in kind.

Countries including Japan and Australia have banned Huawei – which is the frontrunner in building next-generation high-speed 5G networks around the world – and raised concerns that it could help the Chinese government conduct electronic espionage. However, Washington is still struggling to persuade allies such as the UK and Germany to follow suit. – Copyright The Financial Times Limited 2019