U.S. chipmakers stand to lose billions in case the Huawei ban is not reconsidered.
What you need to know
- Qualcomm, Intel, and Xilinx are trying to get the U.S. government to lift the ban on Huawei.
- U.S. chipmakers want to continue supplying chips to Huawei for its mobile devices such as smartphones and wearables.
- The temporary license granted to Huawei to work with U.S. companies is valid until August 19, 2019.
U.S. chipmakers such as Qualcomm and Intel are reportedly quietly lobbying the Trump administration to ease the trade ban on Huawei. Citing people familiar with the matter, Reuters has reported that executives from Intel and Xilinx attended a meeting with the Commerce Department late last month in order to discuss a response to Huawei being added to the entity list. Qualcomm, another U.S chipmaker that sells its chips to Huawei, is also said to have pressed the Commerce Department about the same issue.
While the U.S. chipmakers are not denying the potential security risk posed by Huawei’s 5G networking technology, they argue that the company’s smartphones and servers use commonly available components and are a lot less likely to present any serious security concerns. In a scenarios where U.S. companies are completely barred from having business ties with Huawei, they stand to lose billions of dollars that Huawei spends buying components for its smartphones and wearables. In 2018, Huawei spent nearly $11 billion purchasing components from U.S. companies such as Qualcomm, Micron Technology, and Intel. If the ban by the Trump administration is not eased, Huawei will have no option but to start buying components exclusively from Chinese suppliers.
Andrew Williamson, Vice President of Public Affairs at Huawei recently said during an interview in Mexico that the company did not ask any other company to lobby with the U.S. government on its behalf. He added that U.S. chipmakers are lobbying to reconsider the ban on Huawei for their own interests, as Huawei happens to be among their major customers. Huawei itself, however, is yet to speak with the U.S. government regarding the matter. The company is gearing up its contingency plan by increasing its focus on the Chinese smartphone market and getting its Android replacement OS ready in time. As a direct result of the ban, Huawei is expecting its international smartphone shipments to come down by up to 60% in 2019.