U.S. vs. Huawei: Be careful what you wish for

Huawei could run short of key chips for its networking gear by early next year, as US sanctions take their toll.

The Shenzhen-based vendor is uncertain if it can even fulfill its existing contracts to supply 5G kit to operators in China and around the world, Bloomberg is reporting.

So, the latest and harshest round of Huawei bans is already having the desired effect. But be careful what you wish for.

If Huawei can’t fulfill its 90-plus 5G contracts, the result will be messy and costly for operators.

Presumably those telcos will be forced to turn, directly or indirectly, to Nokia, Ericsson, Samsung and/or NEC, and pay whatever it takes. Neither they nor their governments will thank Washington for that.

Even Attorney General Bill Barr is asking just whose equipment are telcos going to buy if they are warned off Huawei.

More than that, the blowback from this kind of total ban could mean long-term harm to the US chip industry.

China accounted for 23% of global semiconductor demand in 2018. Since the US-China trade war began, average annual growth for US chip firms has declined from 10% to around 1%, Boston Consulting Group points out.

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