China's Huawei Hits Out at U.S. 'Stranglehold' as Chip Maker TSMC Reportedly Cuts Ties

Chinese technology giant Huawei has blasted the U.S. government's "stranglehold" on the company amid reports a key chipmaker was severing ties. The phone and laptop-maker, which is also playing a key role in the development of 5G technology, released a statement today that warned attempts to limit its business with the use of stringent trade blacklists will ultimately "harm U.S. interests." The U.S. commerce department added Huawei to the entity list last May, immediately restricting its access to U.S. components, citing national security. Last Friday, officials announced it would further restrict Huawei's ability to use U.S. technology and software to design or make semiconductors abroad. The components are used by Huawei for its smartphone processors and network chips. The addition to the blacklist means U.S. companies who seek to export components to Huawei, or any of its affiliated companies, have to obtain a license. The reach by the government was possible as chip design equipment is often U.S.-made. American officials complained in a media release at the time that Huawei's acquisition of semiconductors abroad has been "the direct product" of U.S. tech. The Nikkei Asian Review reported Taiwan Semiconductor Manufacturing Co. (TSMC), a key chipmaker, has now halted Huawei orders in response to the update. Today, a Huawei statement hit back: "In its relentless pursuit to tighten its stranglehold on our company, the U.S. government has decided to proceed and completely ignore the concerns of many companies and industry associations. "This decision was arbitrary and pernicious, and threatens to undermine the entire industry worldwide. This new rule will impact the expansion, maintenance, and continuous operations of networks worth hundreds of billions of dollars. "To attack a... company from another country, the U.S. government has intentionally turned its back on the interests of Huawei's customers and consumers. This goes against the U.S. government's claim that it is motivated by network security."

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As reported by the Nikkei Asian Review, TSMC has been relied on by Huawei to help circumvent the U.S. order, which left it without access to Google's full version of the Android operating system (OS) and shunned by some former partners. Under the new rules, all non-U.S. chip manufacturers using U.S. equipment will have to apply for a license before shipping items to Huawei, it is understood. The entity list amendments surfaced on the same day that TSMC announced it was planning to build a new $12 billion plant in the state of Arizona. A spokesperson for the company told Newsweek via email: "TSMC complies with the law and the company does not disclose customers' order details." On Sunday, China's own commerce department warned the country will now "take all necessary measures" in response to the restrictions, renewing fears of a trade war that could negatively impact U.S. firms that rely strongly on the foreign workforce. Such action could affect companies including Apple, Qualcomm and Cisco. Huawei has repeatedly denied that it is a national security risk to America. In its official response, the firm echoed China's stance, saying the U.S. move will have a "serious impact on a wide number of global industries." It admitted that the business will "inevitably" be affected by the ban and said it is weighing its options. The company's statement continued: "In the long run, this will damage the trust and collaboration within the global semiconductor industry which many industries depend on, increasing conflict and loss within these industries. "The U.S. is leveraging its own technological strengths to crush companies outside its borders. This will only serve to undermine the trust international companies place in U.S. technology and supply chains. Ultimately, this will harm U.S. interests. "We will try all we can to seek a solution. We hope that our customers and suppliers will continue to stand with us and minimize the impact of this discriminatory rule."