U.S to consider a new restriction on global chipmakers in doing business with Huawei Technologies

U.S to consider a new restriction on global chipmakers in doing business with Huawei Technologies

  • U.S to consider a new restriction on global chipmakers in doing business with Huawei Technologies.
  • New restrictions will pose a major challenge for Huawei Technologies and TSMC.
  • U.S to alter its Foreign Direct Product Rule that will subject TSMC to American license before supplying to Huawei.

The White House seems committed to placing a global ban on Huawei Technologies. In a recent development, President Trump is evaluating a new option of tweaking the U.S regulations that will enable it to block Huawei Technologies from receiving chips shipments from suppliers like Taiwan Semiconductor Manufacturing Company (TSMC). TSMC is known as the biggest chipmaker across the globe.

As per the sources, while the draft for the aforementioned chip proposal is already ready, it is not yet certain if it will be implemented in the upcoming months. In the high-level meetings among the U.S officials scheduled for this and the next week, such restrictions on doing business with Huawei are among the multiple other options that will be evaluated.

Huawei And TSMC Will Take A Major Hit Due To The New Restrictions

In an event that the U.S goes ahead with this strategy, Huawei Technologies as well as its primary supplier of chips, TSMC, is likely to take a massive hit. The disruption for TSMC, as per the experts, will also be evident in various of its other partners like Qualcomm Inc., and Apple.

Huawei has been in a battle with the United States for dominance in the global technology scene. The U.S is consistently negotiating with its allies to remove the world’s largest telecommunications equipment manufacturer from the upcoming 5G networks. Trump administration repeatedly blames Huawei’s equipment as a tool of espionage for China. Huawei has so far shunned all such claims.  

In an attempt to block global chipmakers to do business with Huawei, the U.S is considering modifications to the Foreign Direct Product Rule. The rule subjects a wide range of goods that are based on the U.S technology/software but are manufactured abroad, to the American regulations.

U.S Commerce Department And Huawei Have Not Commented On The News

According to Reuters, if the U.S decides in favor of altering the rule, the change will be effective by November 2020.

Following the implementation of the rule, foreign companies that rely on U.S equipment for making chips will require a license from the U.S before supplying to their partners including Huawei. The move, as per the analysts, is not going to be well-received by the global United States’ allies.

The U.S Commerce Department refrained to comment further on the recent news at this stage, while Huawei is yet to respond to the request for comment. TSMC spokeswoman, on the other hand, was reported quoting that the company is not interested in responding to hypothetical questions and refrains from commenting on its individual customers.

By Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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