Apple In BIG TROUBLE!
So it seems China is ready to punish Apple,Qualcomm and other big American companiesto avenge Huawei.Last year Huwaei was added to the US ‘EntityList’ which means American companies needto take permission to do business with Huawei.Now, after a year, the ban has been furtherextended for another year.
But Most importantly, Trump administrationis blocking the shipments of semiconductorchips to Huawei from foundries all over theworld which includes TSMC which makes chipsetsfor Huawei.You see companies like Apple, Qualcomm, andMediaTek design their own chipsets but theydon’t have the infrastructure to produce thesechips.That’s where Samsung and TSMC come in.TSMC produces chips such as Snapdragon 865for Qualcomm, A13 bionic for Apple, and Kirin990 for Huawei.
Now, Trump has issued a new rule where TSMCneeds to take permission from the US governmentbefore making chipsets to Huawei.You might ask why do TSMC need to take permissionfrom the US since they’re not an Americancompany.True, but the tech, the machineries TSMC useis American made and that’s why they needto obey whatever Trump tells them to.And he doesn’t want them to make chips forHuawei.Even after getting banned from using Googleservices, Huawei still managed to sell 240million smartphones last year most of whichwere sold in China.But getting banned from TSMC or Samsung wouldtotally cripple.
Huawei and will be the finalnail in the coffin for this Chinese giant.By the way, Huawei has been moving the productionof some chips to SMIC which is another Chinesecompany.But the thing is SMIC is generations behindTSMC and Samsung.They are still at 14nm nodes while TSMC andSamsung are making 5nm process nodes.So this is the beginning of the end for Huawei,without TSMC or Samsung, they can’t stay competitivein the smartphone business, not even in theirhomeland China.Now, To counterattack these harsh measures,China is readying its own ‘Unreliable EntityList’ according to a report by Global Times.
Reuters reports that these are the companiesthe Chinese government is targeting whichare largely dependant on China.An executive council member of the China Societyfor World Trade Organization Studies, toldthe Global Times, “China should implementthese countermeasures to the extent that theUS dare not ask for a mile after being givenan inch.He advised China to carry out “thorough investigationsinto relevant US companies and “let them feelthe pain.”With that being said, this is without a doubtgoing to be bad for Apple, Qualcomm, and otherlisted companies.Around 15 to 20% of Apple’s revenue came fromChina.The majority of domestic Chinese phones useQualcomm’s processors.
So these companies will take a huge hit totheir revenues from this move China.But China also needs to understand that thisis a double-edged sword.Because if they ban the said American companiesfrom selling within then these American companieswill be prompted to move their productionout of China as fast as possible.You see China is a facilitator of low-costlabor.The strength of China is also its greatestweakness.
If the West pulled even half their productionout of China their economy will decline rapidlyAnd China really doesn’t want that becausethey have a lot of mouths to feed.Anyway, let me know what do you think aboutthis down in the comments and as always I’llsee you tomorrow…Peace out!