Huawei Warns of Fallout If U.S. Cuts Off Chip Supplies

Huawei is warning that Pandora’s box would be opened if the U.S. proceeds with its plans to cut the company off from its chip supplies.

U.S. officials decided last week to move forward with alterations to the Foreign Direct Product Rule in an effort to keep Huawei from purchasing chips from companies such as Taiwanese firm TSMC. Under the rule, some foreign goods that are based, at least in part, on U.S. technology can be subjected to U.S. regulations and export rules. Officials hope to use the rule to enforce a stranglehold on Huawei.

Huawei, however, is warning that such a move would have disastrous and far-reaching consequences. According to Bloomberg, Chairman Eric Xu told reporters:

“If the Pandora’s box were to be opened, we’ll probably see catastrophic damage to the global supply chain — and it won’t just be one company, Huawei, destroyed. I don’t think the Chinese government will just watch and let Huawei be slaughtered on a chopping board. I believe the Chinese government will also take some countermeasures.”

Given the number of companies that rely on China as a source of manufacturing, as well as their largest growing market, such a retaliation could have devastating consequences for many American firms.