Market Overview

China’s Huawei blames global chip shortage on U.S. sanctions

Huawei said Monday that U.S. sanctions on the company are partly to blame for the ongoing global chip shortage that’s the subject of a White House conference on Monday. Eric Xu, Huawei’s rotating chairman, said the sanctions imposed over the last two years on the Chinese tech company are, “hurting the global semiconductor industry” because they have “disrupted the trusted relationship in the semiconductor industry.”

Speaking to analysts in Shenzhen at Huawei’s Analyst Summit, Xu said: “The U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world.” He added: “Some of them never stockpiled anything, but because of the sanctions they are now having three months or six months of stockpiles.”

Huawei itself has built up a stockpile of chips to try to ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal. Some companies in other industries, such as the automotive sector, have been forced to temporarily shut down operations as a result of the chip shortage. U.S. auto executives and tech leaders were scheduled to meet remotely with President Joe Biden on Monday.

Until recently, the semiconductor supply chain “was running on the assumption that it should be flexible with zero stockpiles,” said Xu, one of three Huawei executives who take turns as chairman. The U.S. imposed sanctions on Huawei after accusing it of building backdoors into its equipment that could be exploited by the Chinese Communist Party for espionage purposes.

In 2019, Huawei was put on a U.S. blacklist called the Entity List. This restricted American companies from exporting certain technologies to Huawei. Google ended up cutting ties with Huawei, meaning the Chinese giant could not use Google’s Android operating system on its smartphones. Last year, the U.S. moved to cut Huawei off from key chip supplies it needs for its smartphones.

China’s Huawei blames global chip shortage on U.S. sanctions, CNBC, Apr 13

Article Rating