May 19, 2020 04:07 AM

Huawei Warns New U.S. Sanctions Will Exact ‘Terrible Price’ on Industry

A corporate logo sits on a Huawei Technologies Co. NetEngine 8000 intelligent metro router on display during a 5G event in London. Photo: Bloomberg
A corporate logo sits on a Huawei Technologies Co. NetEngine 8000 intelligent metro router on display during a 5G event in London. Photo: Bloomberg

(Bloomberg) — Huawei Technologies Co. warned that the latest U.S. curbs on its business will inflict a “terrible price” on the global technology industry, inflaming tensions between Washington and Beijing while harming American interests.

China’s largest technology company said it will be “significantly affected” by a Commerce Department decree barring any chipmaker using American equipment from supplying Huawei without U.S. government approval. That means companies like Taiwan Semiconductor Manufacturing Co. and its rivals will have to cut off the Chinese company unless they get waivers — effectively severing Huawei’s access to cutting-edge silicon it needs for smartphones and networking gear.

Washington’s decision drew condemnation from Beijing, which regards Huawei as a national champion because of its success in dominating global networking technology. China and Huawei have threatened retaliation, but the company’s Rotating Chairman Guo Ping refrained Monday from commenting on a possible Beijing response — a departure from just two months ago when the company warned that Washington risked opening a “Pandora’s box” and Chinese countermeasures if it chose to go ahead with additional restrictions.

“Our business will significantly be impacted,” Guo said at a company briefing with analysts in Shenzhen. “Given the changes in the industry over the past year, it dawned on us more clearly that fragmented standards and supply chains benefit no one. If further fragmentation were to take place, the whole industry would pay a terrible price.”

Huawei is still assessing the potential fallout of the latest restrictions and couldn’t predict the impact on revenue for now, Guo said. A swathe of Huawei’s suppliers from TSMC to AAC Technologies Holdings Inc. plunged in Asian trading Monday.

Guo was far less vocal than colleague Richard Yu, who runs the consumer division responsible for smartphones. Wu said the restrictions that ostensibly aim to allay U.S. cybersecurity concerns are really designed to safeguard American dominance of global tech.

“The so-called cybersecurity reasons are merely an excuse,” Yu wrote in a post to his account on messaging app WeChat earlier Monday. “The key is the threat to the technology hegemony of the U.S.”

Yu also posted a link to a Chinese article circulating on social media with part of its headline asking: “Why Does America Want to Kill Huawei?”

The U.S. is leveraging its own technological strengths to crush companies outside its own borders, Huawei spokesman Joe Kelly told analysts, reading from a prepared statement. “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.”

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