US-China conflict ruins Huawei; Phonemaker eyes closedown

One of the biggest producers of smartphones and network equipment, Huawei preparing to stop its production as it suffers heavily due to US sanctions which have restricted its access to American companies.

The Chinese tech giant is also about to reconsider its own chip production as it suffers the repercussions of rising tensions between U.S and China over technology and security.

The strife which has now spread to include the popular Chinese-owned video app TikTok and China-based messaging service WeChat had begun with Huawei last year when the US President cut off its access to the U.S. components and technology including Google’s music and other smartphone services.

Those penalties were tightened in May when the White House barred vendors worldwide from using U.S. technology to produce components for Huawei.

Production of Kirin chips designed by Huawei’s own engineers will stop Sept. 15 because they are made by contractors that need U.S. manufacturing technology, said Richard Yu, president of the company’s consumer unit. He said Huawei lacks the ability to make its own chips.

“This is a very big loss for us. Unfortunately, in the second round of U.S. sanctions, our chip producers only accepted orders until May 15. Production will close on Sept. 15,” Yu said. “This year may be the last generation of Huawei Kirin high-end chips.”

More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.

The consumer division president said that this year’s smartphone sales probably will be lower than 2019′s level of 240 million handsets but gave no details. The company didn’t immediately respond to questions Saturday.

Huawei is a leader among emerging Chinese competitors in telecoms, electric cars, renewable energy and other fields in which the ruling Communist Party hopes China can become a global leader. Chinese officials accuse Washington of using national security as an excuse to stop a competitor to U.S. tech industries.

Huawei became the world’s top-selling smartphone brand in the three months ending in June, passing rival Samsung for the first time due to strong demand in China, according to Canalys. Sales abroad fell 27% from a year earlier.

Washington also is lobbying European and other allies to exclude Huawei from planned next-generation networks as a security risk. The UK too has been lining up to ban the Chinese firm’s 5G equipment on its 5G network.

In other U.S.-Chinese clashes, TikTok’s owner, ByteDance Ltd., is under White House pressure to sell the video app. That is due to fears its access to personal information about millions of American users might be a security risk.

On Thursday, President Donald Trump announced a ban on unspecified transactions with TikTok and the Chinese owner of WeChat, a popular messaging service.