Reuters is reporting that the US might change existing regulations in order to block shipments of chips to Huawei from suppliers. According to “sources familiar with that matter”, the main company affected by this decision would be the Taiwanese TSMC, the world’s largest chip manufacturer.
The move would represent yet another unprecedented escalation in the trade war between the US and China that has seen Huawei firmly in the eye of the storm.
TSMC manufacturers Huawei’s Kirin chips, and is also a supplier for Apple and Qualcomm.
The US has authority in this instance if it makes changes to the Foreign Direct Product Rule. This rule affects foreign goods based on US tech and software to US regulation, thus affecting shipments between Huawei and TSMC. The report states that many major chipmakers worldwide rely on manufacturing equipment made in the US.
“Under the draft proposal, the U.S. government would force foreign companies that use U.S. chipmaking equipment to seek a U.S. license before supplying Huawei – a major expansion of export control authority that could anger U.S. allies worldwide.”
In our view, it looks as though the US is trying to find its own backdoors by trying to circumvent law in this way. It is a nation that is incredibly concerned about Huawei’s growth into modern 5G networks. But it is still very unclear if these allegations are in any way grounded in truth – or if Huawei is being used as a scapegoat for the wider US/China trade war.