U.S. may scale back Huawei trade restrictions to help existing customers

Daniel Fowler
May 20, 2019

What Happened: Huawei is prepared for USA efforts to curb the firm's influence, a subsidiary of the Chinese telecommunications giant has said, noting that the company started developing backup chips years ago to compensate for losses due to us countermeasures, the South China Morning Post reported May 17.

Chinese army technician Ren Zhengfei founded Huawei with just $5,000 in seed money, according to company lore, but 32 years later it is at the centre of a titanic tug-of-war between the United States and China for world technological supremacy.

Foreign ministry spokesman Lu Kang, asked if China had invited USA officials for more talks, said China always advocated resolving disputes through dialogue.

"We had been quietly making preparations", Ren said. It will do significant economic harm to the American companies with which Huawei does business, affect tens of thousands of American jobs, and disrupt the current collaboration and mutual trust that exist on the global supply chain.

Huawei was the world's third largest purchaser of semiconductors previous year, accounting for 4.4 percent of global market share, behind only Samsung Electronics Co. The closely held company's revenue growth may fall short of 20%, Ren said.

"It is expected that Huawei's growth may slow, but only slightly", the CEO said.

Chipmakers have to preserve their ability to do business in China, which has surpassed the U.S.to become the largest market for personal computers, smartphones and other devices that are the biggest consumers of chips.

Eventually, ZTE paid a huge amount of fines, replaced board members and accepted a monitoring team from the United States.

Companies like Huawei need their US suppliers, since Chinese manufacturers account for about only 3% of worldwide chip production, according to an estimate by Sanford C. Bernstein & Co. Inc.

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HiSilicon's He has described the self-sufficiency efforts as a "long march in the history of technology" that would pay off with the United State's "crazy decision".

President Donald Trump, who has embraced protectionism and accused China of engaging in unfair trade practices, has threatened to put 25 percent tariffs on a further $300 billion worth of Chinese goods.

Three differences remain between the two countries, according to China.

Crucially, Huawei produces its own Kirin series chipset to power its handsets, rather than using those developed by Qualcomm.

It said restricting Huawei from doing business in the United States would "limit the U.S.to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment and eventually harming the interests of USA companies and consumers".

Huawei is importing smartphone parts and other products worth a total of about 700 billion yen ($6.4 billion) from Japanese companies annually.

The U.S. Commerce Department said on Friday it Could soon Scale back constraints on Huawei Technologies following the blacklisting of this week could have made it impossible for the business to service its customers.

Still, Ren hopes to strengthen Huawei's relations with Japanese companies, saying repeatedly, "Huawei is not in competition with Japanese firms".

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