Chinese tech giant Huawei recently said that it is running out of smartphone processors because of the trade sanctions from the United States.
Huawei was stuck in the middle of a bitter trade war between the U.S. and China. The trade war essentially banned the company from acquiring parts from the U.S. The tech giant said that the ban is wrecking its supply chain, which has seriously affected its production.
Trade war and the pandemic
Huawei president of consumer unit Richard Yu confirmed this during the China Info 100 conference. He claims that the ban has severely hurt the company. If no new parts arrive soon, the company will be forced to abandon production by September.
According to Mr. Yu, the company only managed to close a deal with its producers until May 15. This is after the second round of sanctions from the U.S. were confirmed. If the sanctions are not lifted, it will be the last time the company will produce its Kirin processors.
— Huawei Central (@HuaweiCentral) August 10, 2020
The executive said that the ban made it hard for the company to acquire components for manufacturing. Moreover, the coronavirus pandemic exacerbated the issue with massive global lockdowns. The lockdowns closed many of the company’s supply partners.
Due to these various shortcomings, the company expects to sell fewer smartphones this year. The company is still banned from selling any product in the U.S., one of its biggest markets. The company is facing accusations of intellectual property theft and breaching user privacy.
Hard stance on foreign companies
The United States government is taking a hard stance against foreign companies, especially those from China. U.S. President Donald Trump is also looking to ban the massively popular TikTok app in the country. It is one of the most downloaded smartphone apps, and it is owned by a Chinese tech company.
Just like the case with Huawei, the U.S. government is accusing TikTok of collecting user data. Some prominent political figures also accuse the app of working with the Chinese government.
Since the start of the trade war, Huawei tried to weather the storm by looking for other supply partners. However, pressure from the U.S. government made these potential partners wary of closing a deal with the Chinese company.
Regarding the allegations of spying for the Chinese government, Huawei completely refutes this claim. Early investigations were launched, but it did not uncover any concrete evidence to prove it. Despite this, the U.S. government still issued a harsh sanction against the company, which will continue until next year.
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