Samsung set to cut off Huawei due to US sanctions

Korean component makers Samsung and SK Hynix will be forced to stop supplying Huawei on 15 September if they don’t get a special license from the US.

While this is being extensively reported by South Korean media, the deadline for cutting off Huawei was set in place by the latest round of US restrictions unveiled last month. So Samsung and SK Hynix are in the same boat as Mediatek, being East Asian companies compelled to beg for US permission to go about their business.

According to the reports the Korean companies have made their pilgrimage to the Bureau of Industry and Security, but there’s no indication of them having received a response, one way or the other. Since it’s hard to imagine any technology manufacturing process not using US products or intellectual property at some stage, BIS would have to contradict its own commandments in order to grant that permission, so the smart money is on it being declined.

One of the reports also claims Samsung has won a major deal to manufacture Qualcomm’s lower-tier 5G Snapdragon chips, as part of an effort to expand its customer base in China. Somehow the US restrictions don’t seem to affect other major Chinese smartphone vendors, but since the USD is apparently mulling a move against SMIC next, it seems likely that the remit of this crusade is likely to keep expanding.

China itself has been muted in response to the US assault, limiting itself to sporadic moans. But now it’s being widely reported that the Chinese government has launched a new set of global guidelines for technology companies. This seems to be a direct response to the US Clean Network campaign, which is designed to pressure it allies into removing all traces of Huawei and ZTE from their networks.

“It is important to develop a set of international rules on data security,” Chinese Foreign Minister Wang Yi is reported as saying at the launch of the global data security initiative. “A certain country keeps making groundless accusations against others in the name of a clean network and uses security as a pretext to prey on enterprises of other countries that have a competitive edge. Such blatant acts of bullying must be opposed and rejected.”

Well this is escalating nicely isn’t it? We hate to say we told you so but at the end of the year we predicted that the Balkanisation of the global tech industry would be a key trend this year and so it has. To what extent the US action against China and its companies is merely a form of geopolitical negotiation is unclear, but there’s no sign of China giving any ground. Right now China is doing a good job of isolating itself internationally, but there are bound to be many more twists to this saga.