China's Huawei has warned that the firm will soon enter survival mode after US Commerce Department tightened the sanctions to prevent semiconductors from companies produced using U.S. software and technology from being shipped to Huawei Technologies.
“Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort. However, that effort is still dependent on U.S. technologies," said Secretary of Commerce Wilber Ross.
"The decision was arbitrary and pernicious and threatens to undermine the entire (technology) industry worldwide," a Huawei spokesman said.
Huawei said its business "will inevitably be affected" by the new American salvo. It will "impact the expansion, maintenance and continuous operations of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries".
"We expect that our business will inevitably be affected. We will try all we can to seek a solution," Chairman Guo Ping read from a statement.
Huawei Technologies Ltd. is one of the world’s biggest producers of smartphones and network equipment, but that business is in jeopardy after Washington announced restrictions on the use of American technology by foreign companies that produce its processor chips.
The conflict is politically fraught because Huawei is more than just China’s most successful private company. It is a national champion among industries the ruling Communist Party is pushing to develop in hopes of transforming China into a global competitor in profitable technologies.
Huawei has few alternatives if Washington refuses to allow its suppliers of processor chips to use American technology. The company has developed some of its own chips but the chipmakers that it contracts to manufacture them use American equipment. Even non-U.S. producers such as Taiwanese chipmaking giant TSMC need American components or manufacturing processes.