Trump’s move to stamp out Huawei will hurt US tech

Linda J. Dodson

US actions are reshaping the global technology sector into a bifurcated industry – and as the UK did with Huawei gear in 5G networks, countries are being forced to take a side because of the reach of US sanctions and its global influence.

Of course, the Trump government is unpredictable and could be using the squeeze on Huawei as leverage. A review of the phase one trade deal between Washington and Beijing, signed in January, was scheduled for last weekend, but this has not occurred.

Donald Trump said the talks had been cancelled because of the two countries’ disagreements over Covid-19. “I postponed talks with China. You know why? I don’t want to deal with them now,” Mr Trump said. “What China did to the world was not even thinkable. They could have stopped [the virus].”

The news caused the shares of several Asian chip makers to fall – Taiwan’s MediaTek and European companies such as Dialog and STMicroelectronics. However, investors are more subdued on the impact to US tech, betting that China won’t retaliate too severely as it needs the innovation that US businesses bring to China. Indeed, Apple became the first $2 trillion company after the announcement was made, which doesn’t suggest too much concern.

However, the clock is now ticking for Huawei – what will it do when its stockpiles run out? China may be subdued in its retaliation now, but if the US does not grant licences to US chip groups it will hit their revenues. If Washington forces Huawei into dire straits – Beijing is likely to act.


Garry White is chief investment commentator at wealth management company Charles Stanley 

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