Huawei blasts latest US crackdown as bid for tech ‘supremacy’

TAIPEI — China’s Huawei Technologies on Monday said new U.S. export control rules will have a “huge impact” on its business and blasted Washington’s crackdown on the company as an attempt to ensure American tech supremacy.

“I realized that the U.S. has taken technological leadership as the foundation of their supremacy,” Huawei Rotating Chairman Guo Ping said in his first public comments since the new rules were announced. “Any other countries or companies with more advanced technologies may put U.S. supremacy at risk. Unfortunately, Huawei is taking the lead in the [internet and communication technology] sector, which is also growing very fast.”

Guo was speaking at the opening day of Huawei’s annual analysts summit in Shenzhen, a three-day event held largely online this year due to the coronavirus outbreak.

The U.S. Department of Commerce tightened export control rules Friday to block non-U.S. chipmakers from producing chips based on Huawei’s own advanced designs. The tighter rules will cover vital Huawei suppliers such as Taiwan Semiconductor Manufacturing Co. and China’s own top contract chipmaker, Semiconductor Manufacturing International Co.

TSMC, the world’s biggest contract chipmaker, is Huawei’s sole partner in producing the most advanced smartphone processors, networking processors as well as artificial intelligence chips.

The Taiwanese manufacturer has halted new orders from Huawei to comply with the U.S. rule change, Nikkei reported earlier, while SMIC’s co-CEO has said the chipmaker would fully follow the American regulations, the company told Nikkei.

Huawei said Washington’s move will affect many global industries.

“In the long run, this will damage the trust and collaboration within the global semiconductor industry, which many industries depend on, increasing conflict and loss within these industries,” the company said in a separate statement.

“The U.S. is leveraging its own technological strengths to crush companies outside its own borders,” the statement continued. “This will only serve to undermine the trust international companies place in U.S. technology and supply chains. Ultimately, this will harm U.S. interests.”

Guo said Huawei has increased research and development spending by 30%, raised inventory levels and deployed a massive amount of human resources to address its supply chain vulnerabilities after the company was added to Washington’s “Entity List” last May.

Despite that U.S. blacklist, Huawei still procured up to $18.7 billion worth of components, parts and services from American companies, and it will keep buying from U.S. suppliers if Washington allows.

“However, we will more than ever nurture other suppliers to build a more diversified supply chain,” Guo said.

“The theme of last year was to ‘fix the holes,’ and this year it is all about how to survive,” Guo said. “We are still trying to assess the impact of the new regulations, and we will try all we can to seek a solution.”

Huawei cannot provide a business forecast covering this year for the time being, Guo said. Last year, Huawei took a $12 billion hit in revenue from the U.S. trade blacklisting compared with the company’s original business plan, according to Guo.

In an internal letter to employees posted on Huawei’s online forum, Xinsheng Community, Guo said that the new U.S. rule is not unexpected and that Washington’s crackdown on Huawei will continue into the long term.

“Our operations must be conducted under this difficult environment, and our business will definitely be impacted, but we will never give up,” the letter said.

The Chinese Department of Commerce strongly opposes the tighter U.S. export controls, and said Sunday that such restrictions pose a huge threat to the global supply chain. The department demanded that Washington reverse the new ban and warned that China would take necessary countermeasures.

China will never sit by and watch Huawei be “slaughtered,” Eric Xu, another Huawei rotating chairman, said at the end of March.

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