China calls out US as Huawei faces fresh setbacks

British chip designer ARM has halted ties with Huawei in order to comply with the US supply blockade. ARM's chip designs contain technology of US origin and are the backbone of Huawei handsets.
British chip designer ARM has halted ties with Huawei in order to comply with the US supply blockade. ARM's chip designs contain technology of US origin and are the backbone of Huawei handsets.

Beijing wants 'wrong actions' corrected before it will continue with trade talks

BEIJING/WASHINGTON • China has said that the United States needs to correct its "wrong actions" for trade talks to continue after it blacklisted Huawei, a blow that has rippled through global supply chains and battered shares as investors fear a technology cold war.

Japanese conglomerate Panasonic joined the growing list of global companies which have disengaged from Huawei Technologies, the world's second-largest seller of smartphones and the largest telecoms equipment maker, saying that it has stopped shipments of some components.

Its move came a day after British chip designer ARM said it had halted relations with Huawei to comply with the US supply blockade, potentially crippling the Chinese firm's ability to make new chips for smartphones. Huawei uses ARM blueprints to design the processors that power its smartphones. ARM's chip designs contain technology of US origin and are the backbone of Huawei handsets.

"If the US wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect," Chinese Commerce Ministry spokesman Gao Feng told a weekly briefing yesterday.

"We will closely monitor relevant developments and prepare necessary responses."

The US has accused Huawei of working for the Chinese government and of activities contrary to national security, accusations Huawei denies. The Trump administration softened its stance slightly this week by granting the firm a licence to buy US goods until Aug 19 to minimise disruption for customers.

Washington is lobbying Britain not to use Huawei's products, and yesterday, South Korean newspaper Chosun Ilbo reported that similar pressure was being placed on Seoul. China is South Korea's biggest export market.

US Secretary of State Mike Pompeo told CNBC yesterday that Huawei was lying about ties to the Beijing government, and he believed more US firms would cut relations with the technology giant.

The US blacklist has already jeopardised Huawei's ties with Alphabet's Google, which provides the Android operating system and services such as Gmail, as well as hardware partners.

Huawei founder Ren Zhengfei told Chinese financial magazine Caixin yesterday that he did not see ARM's decision to suspend business with Huawei as having an impact on the company.

 
 
 
 

He said Huawei had a long-term agreement with ARM, and speculated that the British firm had made such a move because its parent, SoftBank Group, was waiting for US approval for the merger of Sprint, which it owns, and T-Mobile US.

Meanwhile, TSMC, the world's biggest contract chipmaker, said yesterday that its shipments to Huawei were not affected by the US order. Toshiba also said it had resumed some shipments to Huawei after temporarily suspending shipments to check whether they included US-made components.

A spokesman for China's Foreign Ministry reiterated that China's door was always open for talks, but that the situation with Huawei and other Chinese technology firms targeted by the US made this difficult.

"Relevant US actions obviously do not create a good atmosphere or environment for consultations," spokesman Lu Kang said at a separate briefing in Beijing.

No further trade talks between top Chinese and US negotiators have been scheduled since the last round ended on May 10, the same day US President Donald Trump sharply increased tariffs on US$200 billion (S$276 billion) worth of Chinese goods and took steps to levy duties on all remaining Chinese imports.

China has retaliated with its own levies on US imports, but it was Washington's subsequent move against Huawei that took the trade war into a new phase, stoking fears about risks to global growth and knocking financial markets. 

 
A version of this article appeared in the print edition of The Straits Times on May 24, 2019, with the headline 'China calls out US as Huawei faces fresh setbacks'. Print Edition | Subscribe