BEIJING (AP) – Chinese tech giant Huawei has stopped processing chips to make smartphones due to US sanctions and will be forced to stop production of its own most advanced chips, a company said, in a sign of growing damage to it company of Huawei from American pressure.
Huawei Technologies Ltd., one of the largest manufacturers of smartphones and network equipment, is at the center of US-China tensions over technology and security. The feud has spread to include the popular Chinese-owned video app TikTok and China-based messaging service WeChat.
Washington last year slashed Huawei’s access to U.S. components and technology, including Google’s music and other smartphone services. Those fines were tightened in May when White House sellers worldwide prevented the use of 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 who need American production technology, said Richard Yu, chairman of the company’s consumer unit. He said Huawei lacks the ability to make its own chips.
“This is a huge loss for us,” Yu said Friday at an industry conference, China Info 100, according to a video recording of his comments on multiple websites.
“Unfortunately, in the second round of US sanctions, our chip producers only accept orders until May 15. Production will close on September 15,” Yu said. “This year may be the latest generation of Huawei Kirin high-end chips.”
More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.
Yu said that this year smartphone sales are likely to be lower than the 2019 level of 240 million handsets, but did not give details. The company did not respond immediately Saturday.
Huawei, founded in 1987 by a former military engineer, denies allegations that it might facilitate Chinese espionage. Chinese officials accuse Washington of using national security as an excuse to stop a competitor to US tech industry.
Huawei is a leader among emerging Chinese competitors in telecom, electric cars, renewable energy and other fields in which the ruling Communist Party hopes China can become a global leader.
Huawei has 180,000 employees and one of the largest research and development budgets in the world at more than $ 15 billion a year. But, like most global tech brands, it requires contractors to produce their products.
Earlier, Huawei announced that its global sales rose 13.1% in the first half of 2020 by 13.1% to 454 billion yuan ($ 65 billion). Yu said that was due to strong sales of high end products, but gave no details.
Huawei became the world-selling smartphone brand in the three months ending in June, beating rival Samsung for the first time due to strong demand in China, according to Canalys. Sales abroad fell 27% from a year earlier.
Washington is also lobbying Europeans and other allies to exclude Huawei from next-generation planned networks as a security risk.
In other U.S.-China clashes, TikTok owner ByteDance Ltd. is under pressure from the White House to sell the video app. This is due to fears that their access to personal information about millions of American users could 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.
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