China's Huawei blames global chip shortage on U.S. sanctions
Sam Shead
CNBC
4/12/2021
Huawei rotating chairman Eric Xu said "the U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world."
Huawei rotating chairman Eric Xu said "the U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world."
Huawei itself has built up a stockpile of chips to try to ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal.
Huawei also announced that it is planning to invest $1 billion into self-driving and electric car research and development as it looks to compete with the likes of Tesla, Apple, Nio and Xiaomi
$1 billion into self-driving cars
Huawei is pursuing new avenues after the sanctions imposed by the Trump administration left its once-leading smartphone business in tatters, while also hindering progress in its semiconductor and 5G businesses.
Xu said he doesn't expect the Biden administration to change the rules any time soon and the company is investing in new areas like health care, farming, and electric cars to try to mitigate the impact of being blacklisted by the U.S.
"We believe, we'll continue to live and work under the entity listing for a long period of time," he said. "The overall strategy as well as the specific initiatives for Huawei are all designed and developed in a way that the company would be able to survive and develop while staying on the entity list for a long time."
Huawei said Monday it plans to invest $1 billion into self-driving and electric car research and development as it looks to compete with the likes of Tesla, Apple, Nio and Xiaomi.
Xu claimed that Huawei's self-driving technology already surpasses Tesla's as it allows cars to cruise for more than 1,000 kilometers (621 miles) without human intervention. Tesla's vehicles can't do more than 800 kilometers and drivers are meant to keep their hands on the wheel for safety purposes.
Huawei will initially partner with three automakers on self-driving cars including BAIC Group, Chongqing Changan Automobile Co and Guangzhou Automobile Group. The company's logo is likely to be put on cars in the same way that Intel's logo is put on some computers.
"Once self-driving is achieved, we're able to disrupt all of the related industries, and we think that in the foreseeable future, namely in the next decade, the biggest opportunity and breakthrough will be from the automobile industry," Xu said.
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© Provided by CNBC The U.S. flag and a smartphone with the Huawei and 5G network logo are seen on a PC motherboard in this illustration taken January 29, 2020.
Huawei said Monday that U.S. sanctions on the company are partly to blame for the ongoing global chip shortage that's the subject of a White House conference on Monday.
Eric Xu, Huawei's rotating chairman, said the sanctions imposed over the last two years on the Chinese tech company are, "hurting the global semiconductor industry" because they have "disrupted the trusted relationship in the semiconductor industry."
Speaking to analysts in Shenzhen at Huawei's Analyst Summit, Xu said: "The U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world."
He added: "Some of them never stockpiled anything, but because of the sanctions they are now having three months or six months of stockpiles."
Huawei itself has built up a stockpile of chips to try to ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal.
Some companies in other industries, such as the automotive sector, have been forced to temporarily shut down operations as a result of the chip shortage. U.S. auto executives and tech leaders were scheduled to meet remotely with President Joe Biden on Monday.
Until recently, the semiconductor supply chain "was running on the assumption that it should be flexible with zero stockpiles," said Xu, one of three Huawei executives who take turns as chairman.
"That's why the panic stockpiling in recent days has added to the supply shortage of global semiconductor industry," he said. "That has disrupted the whole system. Clearly the unwarranted U.S. sanctions against Huawei and other companies are turning into a global and industrywide supply shortage."
The U.S. imposed sanctions on Huawei after accusing it of building backdoors into its equipment that could be exploited by the Chinese Communist Party for espionage purposes.
In 2019, Huawei was put on a U.S. blacklist called the Entity List. This restricted American companies from exporting certain technologies to Huawei. Google ended up cutting ties with Huawei, meaning the Chinese giant could not use Google's Android operating system on its smartphones. Last year, the U.S. moved to cut Huawei off from key chip supplies it needs for its smartphones.
Huawei strongly denies the U.S. allegations.
Huawei said Monday that U.S. sanctions on the company are partly to blame for the ongoing global chip shortage that's the subject of a White House conference on Monday.
Eric Xu, Huawei's rotating chairman, said the sanctions imposed over the last two years on the Chinese tech company are, "hurting the global semiconductor industry" because they have "disrupted the trusted relationship in the semiconductor industry."
Speaking to analysts in Shenzhen at Huawei's Analyst Summit, Xu said: "The U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world."
He added: "Some of them never stockpiled anything, but because of the sanctions they are now having three months or six months of stockpiles."
Huawei itself has built up a stockpile of chips to try to ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal.
Some companies in other industries, such as the automotive sector, have been forced to temporarily shut down operations as a result of the chip shortage. U.S. auto executives and tech leaders were scheduled to meet remotely with President Joe Biden on Monday.
Until recently, the semiconductor supply chain "was running on the assumption that it should be flexible with zero stockpiles," said Xu, one of three Huawei executives who take turns as chairman.
"That's why the panic stockpiling in recent days has added to the supply shortage of global semiconductor industry," he said. "That has disrupted the whole system. Clearly the unwarranted U.S. sanctions against Huawei and other companies are turning into a global and industrywide supply shortage."
The U.S. imposed sanctions on Huawei after accusing it of building backdoors into its equipment that could be exploited by the Chinese Communist Party for espionage purposes.
In 2019, Huawei was put on a U.S. blacklist called the Entity List. This restricted American companies from exporting certain technologies to Huawei. Google ended up cutting ties with Huawei, meaning the Chinese giant could not use Google's Android operating system on its smartphones. Last year, the U.S. moved to cut Huawei off from key chip supplies it needs for its smartphones.
Huawei strongly denies the U.S. allegations.
$1 billion into self-driving cars
Huawei is pursuing new avenues after the sanctions imposed by the Trump administration left its once-leading smartphone business in tatters, while also hindering progress in its semiconductor and 5G businesses.
Xu said he doesn't expect the Biden administration to change the rules any time soon and the company is investing in new areas like health care, farming, and electric cars to try to mitigate the impact of being blacklisted by the U.S.
"We believe, we'll continue to live and work under the entity listing for a long period of time," he said. "The overall strategy as well as the specific initiatives for Huawei are all designed and developed in a way that the company would be able to survive and develop while staying on the entity list for a long time."
Huawei said Monday it plans to invest $1 billion into self-driving and electric car research and development as it looks to compete with the likes of Tesla, Apple, Nio and Xiaomi.
Xu claimed that Huawei's self-driving technology already surpasses Tesla's as it allows cars to cruise for more than 1,000 kilometers (621 miles) without human intervention. Tesla's vehicles can't do more than 800 kilometers and drivers are meant to keep their hands on the wheel for safety purposes.
Huawei will initially partner with three automakers on self-driving cars including BAIC Group, Chongqing Changan Automobile Co and Guangzhou Automobile Group. The company's logo is likely to be put on cars in the same way that Intel's logo is put on some computers.
"Once self-driving is achieved, we're able to disrupt all of the related industries, and we think that in the foreseeable future, namely in the next decade, the biggest opportunity and breakthrough will be from the automobile industry," Xu said.
After sanctions, Huawei turning to businesses less reliant on high-end U.S. tech
Huawei was put on an export blacklist by former U.S. President Donald Trump in 2019 and barred from accessing critical technology of U.S. origin, affecting its ability to design its own chips and source components from outside vendors.
The ban put Huawei's handset business under immense pressure.
The company harbours "no expectation" of being removed from the Entity List under the administration of U.S. President Joe Biden, and is now looking to develop other lines of business after spending the last year in survival mode, the company's rotating chairman Eric Xu said on Monday.
"We cannot develop our strategy based on either a groundless assumption or on unrealistic hopes, because if we do that, and if we cannot be taken off from the entity list, it's going to be extremely difficult for the company," Xu said in a Q&A on the launch of the company's annual summit for analysts.
The company will invest more in businesses that are less reliant on advance process techniques, Xu said, highlighting the company's intelligent driving business, in which he said the company would invest more than $1 billion this year.
The company's autonomous driving technology allows cars to travel over 1,000 kilometers, overtaking Tesla in that area, Xu said.
Xu said Huawei was working with three domestic carmarkers on sub-brands that will be designated 'Huawei Inside' models.
In February, Reuters reported that Huawei planned to make electric vehicles under its own brand, which Huawei denies. [L1N2KnW0F9]
Xu said that U.S. action against Huawei had damaged trust across the semiconductor industry, and contributed to global chip shortages as Chinese companies rushed to stockpile three to six months worth of semiconductors last year, fearing similar action against them.
The combined demand from the Chinese market for chip supplies that are not affected by U.S. rules or which could be compliant with U.S. rules would lead companies to invest in chips and also eventually supply Huawei, Xu said.
"If that can be done, and if our inventory level can help Huawei to last to that time, then that will help us to address the problems and challenges we face."
Xu also said the global rollout of 5G telecoms networks had "exceeded expectations."
Last year, the company saw a modest 3.2% rise in its annual profit as overseas revenues declined due to pandemic-related disruption and the impact of the U.S. sanctions, it said last month.
(Reporting by David Kirton. Writing by David Kirton and Tony Munroe. Editing by Ana Nicolaci da Costa and Mark Potter)
© Reuters/GONZALO FUENTES
Huawei logo at Huawei Technologies France in Boulogne-Billancourt
SHENZHEN, China (Reuters) -Chinese telecoms equipment maker Huawei Technologies is making business resilience its top priority with a push to develop its software capabilities as it seeks to overcome U.S. restrictions that have devastated its smartphone business.
SHENZHEN, China (Reuters) -Chinese telecoms equipment maker Huawei Technologies is making business resilience its top priority with a push to develop its software capabilities as it seeks to overcome U.S. restrictions that have devastated its smartphone business.
Huawei was put on an export blacklist by former U.S. President Donald Trump in 2019 and barred from accessing critical technology of U.S. origin, affecting its ability to design its own chips and source components from outside vendors.
The ban put Huawei's handset business under immense pressure.
The company harbours "no expectation" of being removed from the Entity List under the administration of U.S. President Joe Biden, and is now looking to develop other lines of business after spending the last year in survival mode, the company's rotating chairman Eric Xu said on Monday.
"We cannot develop our strategy based on either a groundless assumption or on unrealistic hopes, because if we do that, and if we cannot be taken off from the entity list, it's going to be extremely difficult for the company," Xu said in a Q&A on the launch of the company's annual summit for analysts.
The company will invest more in businesses that are less reliant on advance process techniques, Xu said, highlighting the company's intelligent driving business, in which he said the company would invest more than $1 billion this year.
The company's autonomous driving technology allows cars to travel over 1,000 kilometers, overtaking Tesla in that area, Xu said.
Xu said Huawei was working with three domestic carmarkers on sub-brands that will be designated 'Huawei Inside' models.
In February, Reuters reported that Huawei planned to make electric vehicles under its own brand, which Huawei denies. [L1N2KnW0F9]
Xu said that U.S. action against Huawei had damaged trust across the semiconductor industry, and contributed to global chip shortages as Chinese companies rushed to stockpile three to six months worth of semiconductors last year, fearing similar action against them.
The combined demand from the Chinese market for chip supplies that are not affected by U.S. rules or which could be compliant with U.S. rules would lead companies to invest in chips and also eventually supply Huawei, Xu said.
"If that can be done, and if our inventory level can help Huawei to last to that time, then that will help us to address the problems and challenges we face."
Xu also said the global rollout of 5G telecoms networks had "exceeded expectations."
Last year, the company saw a modest 3.2% rise in its annual profit as overseas revenues declined due to pandemic-related disruption and the impact of the U.S. sanctions, it said last month.
(Reporting by David Kirton. Writing by David Kirton and Tony Munroe. Editing by Ana Nicolaci da Costa and Mark Potter)
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