European Chipmakers to Keep on Supplying Huawei After Trump Ban

European semiconductor makers said they would still keep on supplying to Huawei Technologies, after the effects of the US ban continued to ripple across global markets.

The Trump administration on Friday blacklisted Huawei - which it accuses of aiding Beijing in espionage - and threatened to cut it off from the US software and semiconductors it needs to make its products.

A spokesman for Infineon Technologies - one of Europe's largest chipmakers - said the majority of products it delivers to Huawei are not subject to US restrictions, adding that the chipmaker can "make adaptions in our international supply chain." Austria-based AMS AG also said that it had not suspended shipments to Huawei.

Huawei accounts for 1.3% of Infineon's sales, and 3.7% of AMS's revenue, according to data compiled by Bloomberg. Infineon has suspended deliveries to Huawei, Nikkei Asian Review reported earlier Monday, citing two people familiar with the matter.

The US Commerce Department has said it will put Huawei on an "Entity List" - meaning any US company will need a special license to sell products to the world's largest networking gear maker and second-largest smartphone brand. Commerce Secretary Wilbur Ross told Bloomberg Television the measures limiting its access to US components would become official on May 17.

US chipmakers including Intel, Qualcomm, Xilinx, and Broadcom have told their employees they will not supply Huawei till further notice, according to people familiar with their actions.

The ruling means that suppliers outside the US that can supply research and manufacture products for Huawei may not be as badly hit.

NXP Semiconductors, which trades in New York and receives 1.6% of its sales from Huawei according to data compiled by Bloomberg, said it has a policy to ensure it complies with laws and trade rules. "This also applies for supplies to Huawei insofar supplies are covered by the US order," the company said Monday, declining to comment further.

Some companies are even openly optimistic. "As a UK headquartered global organisation, with no research and development in the USA, we're in a unique position to work with companies around the world," said Woz Ahmed, executive vice president of corporate development at Imagination Technologies.

Shares in fellow UK-based tech company Dialog Semiconductor, which supplies power-management chips for various Huawei products, is monitoring the situation closely, according to a person familiar with the matter.

So far, investors are more bearish. STMicroelectronics NV fell as much as 10.2% in Paris on Monday, while Infineon dropped as much as 6% in Frankfurt. Shares in AMS dropped as much as 13.4%, the most in over three months. NXP was down 2.8% at 7:51 a.m. in New York during pre-market trading.

Huawei is said to have stockpiled enough chips and other vital components to keep its business running for at least three months, and has been preparing for such an eventuality since at least the middle of 2018, hoarding components while designing its own chips, people familiar with the matter said.

© 2019 Bloomberg