Result Of The US Huawei Ban – So it seems China is ready to punish Apple, Qualcomm, and other big American companies to avenge Huawei. Last year Huwaei was added to the US ‘Entity List, ’ which means American companies need to take permission to do business with Huawei. Now, after a year, the ban has been further extended for another year.
But Most importantly, Trump administration is blocking the shipments of semiconductor chips to Huawei from foundries all over the world. Which includes TSMC, which makes chipsets for Huawei. You see, companies like Apple, Qualcomm, and MediaTek design their own chipsets. But they don’t have the infrastructure to produce these chips.
That’s where Samsung and TSMC come in. TSMC produces chips such as Snapdragon 865 for Qualcomm, A13 bionic for Apple, and Kirin 990 for Huawei. Now, Trump has issued a new rule where TSMC needs to take permission from the US government before making chipsets to Huawei. You might ask why do TSMC needs to take permission from the US since they’re not an American company.
True, but the machinery TSMC use is American made. And that’s why they need to obey whatever Trump tells them to. And he doesn’t want them to make chips for Huawei. Even after getting banned from using Google services. Huawei still managed to sell 240 million smartphones last year, most sold in China.
But getting banned from TSMC or Samsung would totally cripple Huawei and will be the final nail in the coffin for this Chinese giant. By the way, Huawei has been moving the production of some chips to SMIC, which is another Chinese company. But the thing is SMIC is generations behind TSMC and Samsung. They are still at 14nm nodes, while TSMC and Samsung are making 5nm process nodes.
So this is the beginning of the end for Huawei, without TSMC or Samsung. They can’t stay competitive in the smartphone business. Not even in their homeland China. Now, To counterattack these harsh measures. China is readying its own ‘Unreliable Entity List’ according to a report by Global Times.
Reuters reports that these are the companies the Chinese government is targeting which are mostly dependant on China. An administrative council affiliate of the China Society told the Global Times. “China should realize these countermeasures to the area that the US attempt does not ask for a mile following being provided an inch. He urged China to take out “thorough inquiries into related US businesses and “let them touch the injury.”
With that being said, this is, without a doubt going to be bad for Apple, Qualcomm, and other listed companies. Around 15 to 20% of Apple’s revenue came from China. The majority of domestic Chinese phones use Qualcomm’s processors. So these companies will take a huge hit to their revenues from this move China. But China also needs to understand that this is a double-edged sword.
Because if they ban the said American companies from selling within. Then American companies will be prompted to move their production out of China as fast as possible. You see, China is a facilitator of low-cost labor. The strength of China is also its greatest weakness. If the West pulled even half their production out of China. Their economy will decline rapidly, And China really doesn’t want that because they have a lot of mouths to feed.