Plans of a Component Factory in Europe: How China is Trying to Overcome the US Blockade

Published December 19th, 2019 - 11:02 GMT
Plans of a Component Factory in Europe - How Is China Trying to Overcome the US Blockade?
Huawei planning to build a component supply in Europe to overcome the US ban (Shutterstock)
Highlights
Over the last few years, the Chinese equipment maker has been trying to come up with new plans to help minimize its loss

In efforts to overcome sanctions imposed by the US on China’s leading telecommunication company, Liang Hua, Huawei’s chairman, announced plans to build a components plant in a European site. This comes in response to the US president’s order to American tech companies to end all collaborations with the Chinese giant.

Hua told AFP that his company is conducting feasibility studies to help decide the location of the upcoming plant. He also added that “building the new production site could happen very quickly,” but did not provide more details.

US President Donald Trump’s order to cease cooperation with Huawei was followed by a State Department request from American telecommunication companies and chip-makers to sign up to a set of principles, in an attempt to ban the No. 2 smartphone manufacturer in the world, citing national security concerns as a reason. Trump has repeatedly accused Huawei of being a tool for Chinese intelligence.

Huawei has consistently tried to deny accusations of being in cahoots with Chinese state intelligence.

It also states that it no longer relies on American component suppliers to develop its 5G technology. And despite pressure from the US, Huawei's sales still appear to be thriving; it expects to sell up to 250 million handsets this year, exceeding last year's sales. 

But over the last few years, the Chinese equipment maker has been trying to come up with new plans to help minimize expected losses, which is predicted to hit $30bn over the next two years.

Huawei’s plans to build a supply base in Europe follows its decision to purchase chips from Asian suppliers, after major US chip designers and suppliers Intel, Micron, Qualcomm, and Broadcom followed the government’s ban in May 2019.

While a new plant could help the Chinese giant circumvent trade-war challenges, there's no telling how much pressure European countries could face from the US to shut down operations.


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