Business / Corporate

Panasonic to suspend supply of some parts to Huawei in wake of U.S. ban

Kyodo, Reuters

Panasonic Corp. has decided to halt the supply of some components to Huawei Technologies Co., officials said Thursday, the latest sign that last week’s U.S. blacklisting of the Chinese telecoms giant is affecting major Japanese firms.

Panasonic is still examining which product shipments run counter to the economic sanctions imposed on Huawei by the United States. Even when produced outside the United States, some Japanese components that incorporate U.S.-made materials and technology before being shipped to Huawei could infringe the ban.

Impacts from the sanctions may spread to other Japanese manufacturers whose parts are used to assemble Huawei smartphones.

Last year, Huawei received supplies worth ¥670 billion ($6.1 billion) from Japanese companies, including Panasonic and electronic components maker Kyocera Corp.

Toshiba Corp. has also said it suspended shipments to Huawei to check whether its products included U.S.-made components subject to the controls.

Officials at Murata Manufacturing Co., another leading maker of electronic parts, and Kyocera have said they are paying close attention to developments. On Wednesday, major Japanese mobile phone service operators said they would postpone sales of and stop taking orders for new Huawei handsets amid growing concern as to whether Google LLC will continue to provide services — including its Android operating system — to the Chinese manufacturer.

U.S. President Donald Trump last week declared a national emergency banning U.S. companies from using telecoms technology and services provided by entities considered a security threat, in a move seen as targeting Huawei. The U.S. Commerce Department also said last week it had added Huawei to its trade blacklist.

In another blow to the Chinese tech giant, U.K. chip designer Arm halted relations with Huawei to comply with the U.S. blockade of the company, potentially crippling the Chinese telecom company’s ability to make new chips for its future smartphones.

Huawei, like Apple Inc. and Qualcomm, uses Arm blueprints to design the processors that power its smartphones. It also licenses graphics technology from the Cambridge-based company, which is owned by SoftBank Group Corp.

Panasonic will still sell some components to Huawei, a point it made clear on its China website. Arm’s move will have a much bigger impact on Huawei’s ability to do business, particularly in the smartphone sector, where the Chinese firm vies with Samsung Electronics Co. Ltd. for global leadership. Arm’s chip designs contain technology of U.S. origin and are the backbone of Huawei handsets.

The United States last week blocked Huawei from buying goods made from 25 percent or more of U.S.-originated technologies or materials, accusing the firm of being a vehicle of Chinese state power and a potential threat to national security.

The sanctions are a major escalation in the bruising trade war between China and the United States.

While the Chinese company denies the allegations, other countries such as Australia and New Zealand also have blocked the Shenzhen-based firm from bidding for critical contracts due to national security concerns.

Washington is lobbying the U.K. not to use Huawei’s products, and on Thursday a South Korean newspaper reported similar pressure was being placed on Seoul. China is South Korea’s biggest export market.

The U.S. government temporarily eased the restrictions on Tuesday by granting Huawei a 90-day license to buy U.S. goods, in a bid to minimize disruption for its customers.

The Chinese company has remained defiant, saying it has the technology to replace supplies cut off by the ban — a claim analysts have contradicted.