Financial firm Goldman Sachs has compiled a list of American suppliers that provide components or services to Huawei, a Chinese company that was recently put on a trade blacklist, to show how their revenue will be impacted and who has the most to lose.
Huawei Ban’s Impact On American Suppliers
Recently, the U.S. government put Huawei on a blacklist, which meant that all American firm had to cease any cooperation with the Chinese company. Of course, this should disrupt Huawei’s business in all sorts of ways, since the Chinese firm would be losing suppliers across its product line-ups, despite the company’s efforts to stockpile some components expecting that a ban would happen. However, the ban cuts both ways, as the Huawei ban also means revenue loss for the American suppliers.
According to Goldman Sachs’ report, some of the companies that will lose the most revenue include Broadcom, Qualcomm, Micron, and Intel. Although some companies lose more revenue than others, their exposure may be lower. For instance, Intel is expected to lose about $85 million in revenue from Huawei, while AMD will lose about $39 million. However, the loss accounts for only 1% of Intel’s revenue and 2% for AMD’s revenue.
Why Huawei Was Banned
Over the past year, the U.S. government has increased its criticism against Huawei and other Chinese companies calling them untrustworthy and accusing them of espionage for the Chinese government.
Furthermore, the U.S. and China are now in a full-blown trade war, with the U.S. recently raising tariffs for virtually all Chinese imports to 25%, while China withdrew its commitments to no longer force technology IP transfers on American companies doing business in China. The trade war has already led to some consequences such as multiple companies moving as much as half of their production outside of China to other Asian countries.
This situation escalated recently with President Trump signing an executive order that bans American firms from dealing with companies that pose an espionage risk. Huawei is not specifically named in the order, but many companies seem to understand that Huawei was the primary target of this order, so they don’t want to take any chances. Therefore, these companies have already stopped collaborating with Huawei.
The Department of Commerce has agreed to allow Huawei to continue sending software updates to its phones until August 19 through a temporary license.