A new U.S. trade policy against Huawei unravels the network of relationships that have tied the electronics industry and global trade together, and threatens the leadership of the U.S. semiconductor industry...
The latest U.S. trade policy aimed at Huawei will cut the sales of U.S. semiconductor companies to a modest extent at first, but with long-term consequences that threaten to destroy the technological leadership of the U.S. semiconductor industry.
Strategy Analytics said that the new U.S. Government policy announced in May 2020 against Huawei threatens U.S. semiconductor industry exports, innovation, and global leadership. Huawei Sanctions: Bad for Telecoms, Global Semiconductors and the US Economy details the short-term and longer-term effects of the new policy on U.S. semiconductor firms, global wireless and international trade overall.
Christopher Taylor, Director of RF & Wireless Components and author of the report, stated that “The new trade policy aimed against Huawei seems to be motivated by U.S. domestic politics rather than a clear understanding of international trade in the technology sector. The U.S. has legitimate differences with China, but the damage to the U.S. semiconductors industry from this new policy would start at $7 billion in lost sales, and put the industry’s future competitiveness at risk through reduced R&D spending, far outweighing any benefits to the U.S.”
He said that the effects go well beyond the 5-15% sales impact many U.S. firms and could reach 40% or more, damaging R&D spending and the ability of U.S. semiconductor firms to compete. China is likely to retaliate, and has already vowed to cut its dependence on imported semiconductors by putting more investment into its own semiconductor industry.
In the meantime, the new policy has sown confusion in the industry, sent Huawei off on a mission to stockpile chips and find alternative sources, and has sent a chill through the wireless telecoms industry, particularly in 5G.
Rather than demonize China, Huawei, and other Chinese companies, he suggested that the U.S. should develop comprehensive trade policies that recognize and that take into account China’s self-interest, and develop a long-term strategy to promote and maintain the strength of innovation in the U.S.
Stephen Entwistle, VP of Strategic Technologies at Strategy Analytics, added “Semiconductor suppliers Broadcom, Intel, Micron, Skyworks, and Qualcomm and many others will be affected. The U.S. semiconductor industry employs about 250,000, and a loss of U.S. semiconductor leadership would put these jobs at risk, with a multiplier effect extending to three or four times as many U.S. jobs. Foreign semiconductor firms in the supply chain using U.S. technology including MediaTek and the foundry TSMC are also barred from selling to Huawei under the policy, which will affect the entire electronics industry.”