TAIPEI — China’s Huawei Technologies on Monday said new U.S. export controls rules will have a “huge impact” on its business and blasted Washington’s crackdown on the company as an attempt to ensure America’s own tech supremacy.
In his first public comments since the new rules were announced, Huawei Rotating Chairman Guo Ping said, “I realized that the U.S. has taken technological leadership as the foundation of their supremacy. 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 further tightened export control rules last 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., as well as China’s own top contract chip maker 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 company 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 U.S. regulations, the compnay told Nikkei.
Huawei said Washington’s move will affect not only Huawei but also a large number of 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. This will only serve to undermine the trust international companies place in U.S. technology and supply chains. Ultimately, this will harm US interests,” it continued.
Guo said in the past year, Huawei has increased its research and development spending by 30%, raised its inventory level, and deployed a massive amount of human resources to address its supply chain vulnerabilities after the company was added on 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. … We are still trying to assess the impact of the new regulations, and we will try all we can to seek a solution,” Guo said, adding that Huawei will not able to provide a forecast for this year’s business outlook for the time being. Last year, Huawei took a $12 billion hit in revenue from the U.S. trade blacklist 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 further said that the change of the 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.
China’s Department of Commerce on Sunday said it strongly opposes the tighter U.S. export controls and said such restrictions pose a huge threat to the global supply chain. The department demanded the U.S. government to reverse the new ban and warned China would take necessary countermeasures if it did not. At the end of March, another Huawei Rotating Chairman Eric Xu said the Chinese government will never sit by and watch Huawei being “slaughtered.”