The United States has cut off Huawei's access to vital, advanced computer chips, striking a deadly blow to the Chinese tech champion.
The US Commerce Department on Monday announced fresh sanctions that restrict any foreign semiconductor company from selling chips developed or produced using US software or technology to Huawei, without first obtaining a license to do so.
Restrictions announced in May had already limited companies such as Taiwan Semiconductor Manufacturing Company (TSM) from making and supplying Huawei with chips designed by HiSilicon, a subsidiary of the Chinese company. Monday's measures effectively extend that ban to all chip designers, such as Taiwan's MediaTek, whose shares plunged nearly 10% Tuesday.
It is just the latest sign that President Donald Trump is ramping up pressure on Beijing, as the United States and China battle over who controls the technologies of the future. In the last three weeks, the Trump administration has threatened bans on popular Chinese-owned apps TikTok and WeChat, and signaled that it could soon restrict Alibaba's operations in the United States.
Washington has long alleged, without providing proof, that Huawei products threaten national security because they could be used to spy on Americans. Huawei has repeatedly denied that its gear and products pose a national security risk.
The company did not respond to a request for comment but a senior US executive said Huawei would survive.
"We took a hit of about $12 billion in 2019 in our revenue, and we may take a hit again, but we are committed to the long term, and we have the capabilities and resources to adjust over time," Andy Purdy, chief security officer for Huawei USA, told CNN Business' Julia Chatterley. "We are privately owned, we have time, and if we take a hit in revenue that's fine. We can bounce back as we continue to do."
Paul Triolo, head of geotechnology at Eurasia Group called the latest US restriction "a lethal blow to China's most important technology company."
It is "potentially [the] most serious effort by the US government to choke off the company's ability to obtain advanced semiconductors for all of its business lines," Triolo wrote in a note on Monday.
Huawei relies on foreign-made semiconductors to power its 5G telecommunications gear. British officials cited the uncertainty to the company's supply chain as a key reason for banning Huawei from the United Kingdom's 5G network last month.
The new US sanctions could also be the final nail in the coffin for Huawei's mobile phone business.
Huawei's hope that it could rely on third-party chip designers to continue making smartphones "has been dashed," Edison Lee, an analyst with brokerage firm Jefferies, wrote in a note on Monday.
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