(China/Huawei) Purported chip license revocation might affect Huawei’s PC business, but bigger impact in doubt: analysts (Global Times)

Chinese tech giant Huawei is purportedly being hit by a revocation of licenses for chip supplies, as part of the Trump administration’s final act of belligerence.

Stating that the fresh cutoff woes might affect Huawei’s personal computer business, industry analysts raised doubts over the feasibility of the revocation and noted Huawei still has sufficient chip inventory to fend off cutoff threats.

The Chinese tech conglomerate’s foreign suppliers won’t simply confirm to the outgoing Trump administration’s order, they believed, citing China’s newly unveiled rules that could see the country slapping countermeasures on unjustified extraterritorial application of foreign legislation.

Huawei suppliers including Intel were notified by the Trump administration of a revocation of several licenses for exports to the Chinese firm, Reuters reported, citing people familiar with the matter.

The US Commerce Department has issued “intents to deny a significant number of license requests for exports to Huawei and a revocation of at least one previously issued license,” per the report.

Huawei had no comment on the purported license revocation when reached by the Global Times on Monday.

Intel has yet to respond to a request for comment.

“We currently have no information about this,” Semiconductor Manufacturing International Corporation, a major semiconductor supplier to Huawei in the Chinese mainland, told the Global Times on Monday.

South Korean chipmaker SK Hynix said it “cannot comment on this matter” when reached by the Global Times on Monday.

Semiconductor shares posted a gain of over 2 percent in the A-share market on Monday morning, outperforming the flagship Shanghai Composite Index.

The said cut-off of chipset supplies from Intel will mainly weigh on Huawei’s consumer business, especially its laptop business, which has a high demand for the high-end chipset, Jiang Junmu, a veteran industry observer who is also chief writer at telecom industry news website, told the Global Times on Monday.

“Besides laptop business, such new restrictions may also pose an impact on its server business, however, Huawei has now been acting to replace some with its own Kunpeng server, “Jiang said.

If Intel, a major chip producer, is banned from supplies to Huawei, its PC business that a historically performed well, would inevitably take a hit after its smartphone was overshadowed by cutoff concerns, Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times on Monday.

Richard Yu Chengdong, head of Huawei’s consumer business group, revealed in August that Huawei’s Matebook had accrued 19.6 percent market share in China.

Huawei ceded its top spot to Samsung on global smartphone shipment rankings in the third quarter of last year, market research firm International Data Corporation (IDC) disclosed earlier in January.

Huawei’s share of the global smartphone market shrank to 14.6 percent in the third quarter from 20.2 percent in the prior quarter while Samsung saw its share jump to 22.7 percent from 19.5 percent, according to IDC, explaining that Huawei “continued to face challenges due to the ever-increasing impact of the US sanctions, which are taking a toll on its performance even in China as the brand is trying to pace out its shipments over a longer period.”

But by no means will Huawei be mortally wounded by the latest cutoff action, as the Chinese company has been investing heavily in enhancing self-reliance on core technologies, according to industry representatives and analysts.

“Huawei has prepared sufficient chip inventories enough for keeping its business running for one to two months,” Ma Jihua, a veteran industry analyst, told the Global Times on Monday.

In the words of Jiang, “Huawei’s fundamentals rely on its carrier business, even without the consumer business, the company will be able to survive,” Jiang said.

Sources close to Huawei unveiled recently that the company could not pin their hope on the relaxation of restrictions on Chinese high-tech after Biden takes the office, and facing extreme pressure from Washington, it will continue investing in core technologies in order to major breakthroughs, diversifying its suppliers and not only relying on one single country and company.

Market watchers cast doubts over the feasibility of the revocation order.

The purported cutoff notification, one of the Trump administration’s last calls to exert maximum pressure on China, is less likely to be a mind controller, according to Xiang.

US government departments might not implement the revocation order over the last few days and the incoming Joe Biden presidency is unlikely to see Trump’s policies implemented unchanged, Ma said, expecting a pullback from Trump’s maximum pressure policy under the Biden administration.

What’s more, China’s newly unveiled rules on unjustified extraterritorial application of foreign legislation could deter foreign businesses from blindingly following foreign bullying of Chinese businesses, observers emphasized.

Overseas suppliers tend to rethink as a hefty price is likely to be paid if they follow the footsteps of the US government to crack down on Chinese businesses, Ma reckoned, referring to the marginal effect of US sanctions that is increasingly in decline.

The continued disruption to tech supply chains, with Huawei squarely in the firing line, will need to be addressed under the Biden presidency as hopes are mounting over reconnection between the world’s two largest economies in economic and trade terms, experts said.