Not surprisingly, the American anti-Huawei embargo was renewed on Thursday, May 14. But not only has the Huawei-ban been extended until 2021, it has also been intensified by restricting sales of semiconductors to the Chinese giant, which are essential to its Kirin chips. China is already preparing its counterattack.
TSMC, a global semiconductor manufacturing giant (which makes the chips for the Apple iPhone, for example) has just announced that all future orders on behalf of Huawei will be stopped. The decision was taken to comply with yet another U.S. government ban.
Under these new measures, manufacturers of foreign technologies (such as Taiwan-based TSMC) but using American equipment, hardware, or software are prohibited from doing business with Huawei unless they obtain a license from Washington. The aim is to cut off Huawei's supply of semiconductors, an essential component in the manufacture of its Kirin chips.
China strikes back
Faced with this umpteenth outburst in a long trade war, China is already preparing its response. According to Reuters, quoting the Chinese tabloid Global Times close to power, Beijing is reportedly about to create its own "list of unreliable entities."
Like the United States, China could therefore register American companies and launch investigations or impose restrictions on them. According to the Global Times, the government plans to target companies such as Apple, Boeing, and Qualcomm.
Needless to say, China is a key market for manufacturers like Apple and Qualcomm. Admittedly, Apple is far from being as dominant as Huawei in terms of market share, but 14.8 percent of the Cupertino company's total revenues are generated in this Chinese market, for example. This is also where most of its manufacturing plants are located.
Global smartphone sales are down 17% in the first quarter of 2020 compared to 2019 (Q1). What is certain is that this series of measures and countermeasures can only weaken the already feverish smartphone market.