Published in Mobiles

US needs to get its house in order

by on24 May 2019

China says global supply chains are falling to bits

China said the United States needs to correct its “wrong actions” for trade talks to continue after it blacklisted Huawei, a blow that has rippled through global supply chains and battered technology shares.

Japanese conglomerate Panasonic joined a growing list of global companies that are disengaging from Huawei the world’s second-largest seller of smartphones and the largest telecom-gear maker, saying it had stopped shipments of some components.

British chip designer ARM said it had halted relations with Huawei to comply with the U.S. supply blockade, potentially crippling the Chinese firm’s ability to make new chips for smartphones. Huawei uses ARM blueprints to design the processors that power its smartphones.

However, the Chinese Commerce Ministry spokesman Gao Feng told a weekly briefing that if the United States wants to continue trade talks, they should show sincerity and correct their wrong actions.

“Negotiations can only continue based on equality and mutual respect. We will closely monitor relevant developments and prepare necessary responses".

The United States has accused Huawei of working for the Chinese government and engaging in activities contrary to national security, accusations Huawei denies.

The Trump administration softened its stance slightly this week by granting the firm a license to buy US goods until 19 August to minimize disruption for customers.

However, US Secretary of State Mike Pompeo kept up the pressure against Huawei in a CNBC interview on Thursday, saying its founder chief executive was lying about his company’s ties to the Beijing government.

“That’s just false. To say that they don’t work with the Chinese government is a false statement. He is required by Chinese law to do that. The Huawei CEO, on that at least, isn’t telling the American people the truth, nor the world”, Pompeo said.

Pompeo said he expected other American companies to cut ties with Huawei as the risk of doing business with it becomes clear.

Meanwhile, Toshiba has resumed some shipments to Huawei after temporarily suspending shipments to check whether they included US-made components.

Analysts are starting to get a bit concerned. Saxo Bank’s head of equity strategy, Peter Garnry said that the world is witnessing is a potential reconfiguration of global trade as it has stood since World War II. Investors should begin thinking about how sensitive their portfolios are to global supply chain-exposed shocks.

However, Huawei founder Ren Zhengfei told Chinese financial magazine Caixin on Thursday that he did not see ARM’s decision to suspend business with Huawei as having an impact on the company.

Huawei had a long-term agreement with ARM and speculated the British firm had made such a move because its parent, Japan’s SoftBank Group Corp, was waiting for US approval for the merger of Sprint Corp, which it owns, and T-Mobile US.

Analysts however do not believe that Huawei can ensure a steady supply chain without US help, saying the technology it buys from American companies would be “hard to replace.”

Last modified on 24 May 2019
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