Huawei Blames Global Chip Shortage on U.S. Sanctions

Chinese Telecoms company Huawei Technologies Co. came out guns blazing on Monday suggesting that it believes U.S. sanctions on the company are to a certain extent to blame for the ongoing global chip shortage.

Speaking to analysts regarding the global chip shortage in Shenzhen at Huawei’s Analyst Summit, Eric Xu, Huawei’s rotating chairman, and CEO said that the sanctions imposed over the last two years on the Chinese tech company by the Trump Administration are, “hurting the global semiconductor industry” because they have “disrupted the trusted relationship in the semiconductor industry.”

Xu added: “Some of them never stockpiled anything but because of the sanctions they are now having three months or six months of stockpiles.”

Huawei itself has built up a stockpile of chips to try and ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal. Some companies in other industries, such as the automotive sector, have been forced to temporarily shut down operations as a result of the chip shortage.

Up until recently, the semiconductor supply chain “was running on the assumption that it should be flexible with zero stockpiles,” said Xu, one of three Huawei executives that take it in turns to be CEO.

“That’s why the panic stockpiling in recent days has added to the supply shortage of global semiconductor industry,” he said. “That has disrupted the whole system. Clearly, the unwarranted U.S. sanctions against Huawei and other companies are turning into a global and industry-wide supply shortage.”

The U.S. has accused Huawei of building backdoors into its equipment that could be exploited by the Chinese Communist Party for espionage purposes and imposed sanctions on the company so in 2019, Huawei was put on a U.S. blacklist called the Entity List. This restricted American companies from exporting certain technologies to Huawei. 

Google also ended up cutting ties with Huawei, meaning the Chinese giant could not use Google’s Android operating system on its smartphones. Last year, the U.S. moved to cut Huawei off from key chip supplies it needs for its smartphones. But Huawei strongly denies the U.S.′ allegations.