US Moves To Cut Off Huawei's Chip Supplies

The US government on Friday moved to block global chip supplies to blacklisted telecoms equipment giant Huawei Technologies, spurring fears of Chinese retaliation and hammering shares of US producers of chipmaking equipment.

A new rule, unveiled by the Commerce Department, expands US authority to require licences for sales to Huawei of semiconductors made abroad with US technology, vastly expanding its reach to halt exports to the world's No 2 smartphone maker.

"This action puts America first, American companies first, and American national security first," a senior Commerce Department official told reporters in a telephone briefing on Friday.

Huawei, the world's top telecoms equipment maker, did not respond to a request for comment.

News of the move against the firm hit European stocks as traders sold into the day's gains, while shares of chip equipment makers like Lam Research and KLA Corp fell around 5 percent in US trading.

The reaction from China was swift, with a report on Friday by China's Global Times saying Beijing was ready to put US companies on an "unreliable entity list," as part of countermeasures in response to the new limits on Huawei.

The measures include launching investigations and imposing restrictions on U.S. companies such as Apple, Cisco Systems and Qualcomm, as well as suspending purchase of Boeing Co airplanes, the report said.

The Commerce Department's rule, effective on Friday but with a 120-day grace period, also hits Taiwan Semiconductor Manufacturing, the biggest contract chipmaker and a key Huawei supplier, which announced plans to build a US-based plant on Thursday.

TSMC said on Friday it is "following the US export rule change closely" and working with outside counsel to "conduct legal analysis and ensure a comprehensive examination and interpretation of these rules".

The department said the rule is aimed at preventing Huawei from continuing to "undermine" its status as a blacklisted company, meaning suppliers of US-made sophisticated technology must seek a US government licence before selling to it. (Reuters)