UPDATED 20:32 EDT / JUNE 16 2019

POLICY

U.S. chip suppliers are protesting the Huawei ban

American computers chip suppliers, including Intel Corp., Qualcomm Inc., Broadcom Inc. and Xilinx Inc., have reportedly been lobbying U.S. government officials to lift a ban on equipment sales to Chinese technology firm Huawei Technologies Co. Ltd.

The companies are said to be alarmed over the prospect of losing billions of dollars in sales to Huawei, which is one of the biggest buyers of their computer chips and related components.

Reuters reported Sunday that executives of Intel and Xilinx met with officials from the U.S. Commerce Department last month in order to discuss President Donald Trump’s decision to place Huawei on a government blacklist on national security concerns. That decision means U.S. firms are not allowed to do business with Huawei without obtaining a special license first. Qualcomm held separate discussions with the Commerce Department, Reuters said.

The companies say they should be allowed to continue selling smartphone and computer server components to Huawei, since those parts are commonly available and are not related to the government’s security concerns over the Chinese firm’s 5G networking gear.

“It’s about preventing harm to American companies,” said an anonymous source from one of the chipmakers, adding that there was no desire to help Huawei specifically.

The chipmakers stand to lose a huge amount of money as a result of the ban. Just last week, for example, Broadcom said it could lose about $2 billion in sales if it’s unable to supply Huawei.

“Trade wars by their definition have losers on both sides, as products get more expensive for customers and suppliers fear the loss of customers due to increased prices,” Holger Mueller, an analyst with Constellation Research Inc., told SiliconANGLE. “The Huawei ban is even more extreme as it brings both value chains and supply chains to a screeching halt.”

In addition to the chipmakers, Google LLC and the U.S.-based Semiconductor Industry Association have also been pressing for a reprieve.

“For technologies that do not relate to national security, it seems they shouldn’t fall within the scope of the order,” Jimmy Goodrich, vice president of global policy at the SIA, told Reuters.

Separately last week, Russell Vought, chief deputy director of the Office of Management and Budget, wrote a letter to U.S. Vice President Mike Pence asking that restrictions on sales to Huawei be delayed for at least two years. He said the delay was necessary because the ban would make it difficult for government agencies to find suppliers for “essential technology” they need.

The chipmakers are in a difficult position, since they “don’t want to be seen as aiding an alleged spy and sanctions violator,” but at the same time they don’t want to lose one of their best clients, Reuters said.

Andrew Williamson, Huawei’s vice president of public affairs, said in an interview the chipmakers were pressuring the U.S. government on their own initiative, and that his company had not asked anyone for help.

“They’re doing it by their own desire because, for many of them, Huawei is one of their major customers,” he said.

But analyst Patrick Moorhead of Moor Insights & Strategy disagreed, saying that it was his understanding that China’s government invited the chipmakers to Beijing, where it asked for their support to against the ban and the U.S.’s wider tariffs on Chinese products. He added that those lobbying efforts could be a result of that request, despite the chipmakers having reservations about it.

“On one hand, U.S. chipmakers dislike the way China handles their intellectual property, but they do want access to Chinese markets for growth,” Moorhead said.

Huawei’s own response to the ban has been focused on a media campaign refuting the allegations against it. Rather than lobby U.S. officials, the company took out full-page advertisements in several newspapers aimed at softening its image, while Chief Executive Officer Ren Zhengfei has given a number of interviews to western media to deny the allegations of spying.

A spokesperson for the Commerce Department told Reuters the agency has responded to several firms regarding the scope of the new regulatory requirements, but those conversations don’t influence the government’s policies.

Photo: Duncan Riley

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