US Sanction Threat for Sales to Huawei to Cost Japanese Tech Giants $10 Billion per Annum
They now have $10 billion reasons per year to ditch US machine tools
U.S. sanctions against Huawei Technologies that took effect Tuesday have forced Japanese chipmakers to cast a wider net for business to fill the gap left by a loss of sales to China’s largest telecommunications equipment supplier.
The U.S. Commerce Department banned all exports to the Chinese telecommunications company of semiconductors made with American technology, exempting only shipments that are already en route. Japanese companies supplied about 1.1 trillion yen ($10.4 billion) in parts to Huawei last year, according to U.K. research company Omdia.
This ban was the main reason Sony last month trimmed its capital spending plans for the three years through fiscal 2020 by about $470 million. The Japanese company brings in billions of dollars annually from sales of image sensors to Huawei, which were completely halted by Tuesday.
Sony is considering applying for a license to sell to Huawei. But “we need to work on diversifying our customers,” a company executive said.
One opportunity lies in selling to smartphone makers, including Apple and Chinese players, that are positioned to eat into Huawei’s market share if the ban forces the company to cut production. Sony also looks to develop sensors for a broader range of applications, including autos and industrial machinery, rather than rely so heavily on mobile devices.
Renesas Electronics on Tuesday stopped supplying Huawei with semiconductors for 5G network base stations. Meanwhile, the Japanese chipmaker is ramping up marketing to rival base station manufacturers, such as Sweden’s Ericsson and Finland-based Nokia.
Toshiba spinoff Kioxia suspended shipments of flash memory to Huawei on Tuesday. The company plans to repurpose capacity that would otherwise be idled by the ban to produce chips for other smartphone makers and for data centers.
The sweeping nature of the sanctions presents compliance challenges. Even supplying chips to a third party could run afoul of U.S. export regulations if the products in question are ultimately used by Huawei. Jeff Wang, chairman of the Tokyo-based subsidiary Huawei Japan, last month noted Japan’s “extremely important role in global supply chains.”
Businesses are being forced to scrutinize the routes that their parts take to avoid potentially risky transactions, and getting a full picture will take time.
Toshiba on Tuesday temporarily halted all shipments of hard disk drives and chips, citing the need to determine if any of its products are covered by the ban.
Any companies that violate the sanctions will be barred from importing American software and technology covered by the export regulations, whether from the U.S. or from third countries. The rules span such a massive number of products that such a ban would be a major hindrance to manufacturing and marketing.
Violators may face other penalties on top of this, including fines of up to $1 million and imprisonment, along with the reputational risks that come with breaking U.S. regulations.
“We have to be cautious about our investment plans from fiscal 2021 onward as well,” said a Sony executive who worries about the Huawei row dragging on.
As for Huawei, production there is not expected to take a hit right away, as the company rushed to stock up on parts before the sanctions took effect. The spot price of DRAM chips — vital for smartphone production — has jumped 7% since early this month, which a representative from a semiconductor trading company chalked up to a final rush of buying by Huawei.
But the company’s smartphone shipments are forecast to plunge 70% in 2021 compared with the expected total for this year, by one estimate. DRAM “prices will fall around mid-September as [Huawei] stops building up its inventories,” said Akira Minamikawa at Omdia.
Source: Nikkei Asia Review
This is a US government that repeatedly lies, cheats, steals, spies, kills,
maims, enslaves, breaks the laws, overreaches its authority, and abuses
its power at almost every turn.
Was it not possibly for the American to think other countries in a short time could make their own chip making methods and stop using American ones. China already stopped all construction of American nuclear reactors and will use their own or French ones.
USA may win the battle but it will lose the technological war ultimately. Already other Asian countries like Korea, Japan and Taiwan, though much smaller in population size than USA, have superior cutting edge technologies. The elephant in the room is China which achieved so much in such a short time. Yes, the Asian age is here.
So are we to understand that the US has won in its fight for hegemony in the commercial world?!
It sure looks like they control the commerce (and economies) of all other
industrial nations….what a sad commentary on international commerce.
The US can’t compete on a level playing field (or any other for that matter) so they bully other countries’ tech companies (among others) into paying more for American products and ditching the lower cost Chinese parts and products, which, in reality, are probably better in all ways. What a damn shame for the world, which probably hasn’t taken a good look at the orange buffoon in the white house and all his ilk in Washington and Wall Street and how they live like kings on funds that they have bilked from American citizens, China and many others.
They know how to cheat and scam but not a thing about how to make good
products….pathetic!
Mary, SWIFT, as we speak, is being taken down. Russia and China are only too aware of the dangers inherent in the crumbling empire lashing out in all directions, they’re quietly playing chess moves and letting America and its insignificant puppet, Britain (England) destroy themselves and avoiding nuclear conflict at all costs…although they would, without doubt, win that, all of humanity and planet Earth, would suffer greatly. No, it’s better to let them disintegrate slowly, as exhibited by the increasing madness of both Trump and Johnson and their disregard for international treaties, laws and standards. They WILL be ostracised, eventually, by the international community and wiill fade into well-deserved obscurity.
It will become increasingly difficult to bully increasingly vertically integrated markets in Asia.
Intel inside is likely to become Asia inside.
Poor sick, satanic America. This moribund entity of unsurpassed evil is not even intelligent enough now, to realise that every added illegal sanction is another nail in its very peppered coffin.The world will decouple from the dollar and for the nation that has sponged off the rest of the world since 1971, a very sad, lonely and impoverished future lies ahead. Around $240 trillion in debt, an empty Fort Knox and a country bereft of intelligence, diplomatic skills and anything resembling basic humanity, it’s the final curtain call for the dictator who tried so hard to suffocate humanity.
There will be little reason to decouple from a failed petrodollar and dysfunctioning SWIFT after China, Russia, and Iran begin trading in their gold-backed currencies.
self defeating backward murikans
Taiwan is conspicuous by its absence from this report.
It probably isn’t as absent from mainland China as it was after Trump issued his fascist sanctions.
It doesn’t matter, because China’s technology sector isn’t hindered by American sanctions, and they will probably be making all of their own superior semiconductors by this time next year. From that point, those who choose Huawei will find their needs being fulfilled faster than by any other supplier, putting them technologically well ahead of anything the long-floundering Japanese could match.
The more important question is how America will do without access to China’s REEs, as they hold a share in the only REE mine in America, the Mountain Pass in San Bernardino County, California.