Several major tech stocks are dragging the broader market lower in premarket trade Friday morning after Beijing threatened retaliation following a Reuters report claiming the US was moving to cut off Huawei from critical US supplies, something the US has repeatedly threatened to do since President Trump’s inauguration, though it has never followed through.
The Trump administration on Friday moved to block shipments of semiconductors to Huawei Technologies from global chipmakers, in an action that could ramp up tensions with China.
The U.S. Commerce Department said it was amending an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”
The department added the “announcement cuts off Huawei’s efforts to undermine U.S. export controls.”
The rule change is a blow to Huawei, the world’s no. 2 smartphone maker, as well as to Taiwan’s TSMC, a major producer of chips for Huawei’s HiSilicon unit as well as mobile phone rivals Apple Inc and Qualcomm Inc.
Huawei, which needs semiconductors for its widely used smartphones and telecoms equipment, is at the heart of a battle for global technological dominance between the United States and China.
Not even an hour after that report hit, as CNBC’s Andrew Ross Sorkin parroted Alphabet Chairman Eric Schmidt’s defense of Beijing from yesterday’s interview, the English-language Global Times issued what sounded like a serious retaliatory threat.
GT editor-in-chief Hu Xijin, a well-known mouthpiece for the CCP , tweeted that if the US does cut off supplies to Huawei, Beijing is fully prepared to respond by effectively banning a slate of massive American corporations from the Chinese market. For more than a year now, Beijing has been threatening to place American companies on an “unreliable entities” list – they even threatened to slap FedEx on the list after it “mishandled” a couple of packages.