U.S. Tech Firms Join War on Huawei

Monday, May 20, 2019

Major U.S. tech companies are taking the next step in the U.S.-China trade war, refusing to supply parts and technology to Chinese telecom giant Huawei. Intel INTC, Qualcomm QCOM and Alphabet GOOGL are declining shipments of computer chips and component’s to Huawei, which has become President Trump’s latest flashpoint in the U.S.-China trade war.

Last week, the president took action against Huawei by executive order, citing “national security concerns” that require harsh action against the global telecom major. We saw last December that Huawei’s CFO, the daughter of the company’s CEO, was arrested in Canada at the request of U.S. authorities, and is currently under house arrest in Vancouver, British Columbia. She continues to fight extradition to the U.S.

In 2018, Huawei bought around $11 billion in supplies from U.S. tech firms. Plans for the current year included 5G technological development on a global scale, including the U.S. In fact, U.S. broadband companies in rural areas have grown dependent on Huawei equipment and services, which have carried inexpensive price-points relative to competition. This crackdown on Huawei is likely to bring broadband rollout to swaths of American hinterland to a crawl.

This squeeze on Huawei does apparently have a pronounced affect on Chinese technology overall —chip supplies are largely developed by countries outside China, which reportedly produces just 3% of the chips its countries use. Investing in more of its own parts production woulds take considerable investments and, perhaps more importantly, time. Depending on how long the current trade war draws out, however, the more likely it is China would put forth attempts to go it alone in the tech supply sector.

Eurozone markets did not like this latest development, with indexes trading into the red. Pre-market futures are down notably a half-hour before today’s opening bell. Other tech suppliers, such as Xilinx XLNX and Micron MU, are also trading down in early market activity.

Mark Vickery
Senior Editor

Questions or comments about this article and/or its author? Click here>>

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
Intel Corporation (INTC): Free Stock Analysis Report
Micron Technology, Inc. (MU): Free Stock Analysis Report
Xilinx, Inc. (XLNX): Free Stock Analysis Report
To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.