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Huawei faces fresh US sanctions that put its entire business at risk

The US Commerce Department on Monday announced fresh sanctions that restrict any foreign semiconductor company from selling chips developed or produced using US software or technology to Huawei, without first obtaining a license to do so.

Earlier restrictions announced in May limited companies such as Taiwan Semiconductor Manufacturing Company (TSMC) from manufacturing and supplying Huawei with chips designed by HiSilicon, the Chinese company’s chip subsidiary.

Huawei's hopes of global domination have been dashed
It is just the latest sign that President Donald Trump is ramping up pressure on Beijing, as the United States and China battle over who controls the technologies of the future. In the last three weeks, the Trump administration has threatened bans on popular Chinese-owned apps TikTok and WeChat, and signaled that it could soon restrict Alibaba’s operations in the United States.

Huawei did not respond to a request for comment in time for publication.

Paul Triolo, head of geotechnology at Eurasia Group called the latest US restriction “a lethal blow to China’s most important technology company.”

It is “potentially [the] most serious effort by the US government to choke off the company’s ability to obtain advanced semiconductors for all of its business lines,” Triolo wrote in a note on Monday.

Huawei relies on foreign-made semiconductors to power its 5G telecommunications gear. British officials cited the uncertainty to the company’s supply chain as a key reason for banning Huawei from the United Kingdom’s 5G network last month.

The new US sanctions could also be the final nail in the coffin for Huawei’s mobile phone business.

Huawei’s hope that it could rely on third-party chip designers to continue making smartphones “has been dashed,” Edison Lee, an analyst with brokerage firm Jefferies, wrote in a note on Monday.

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