UK Semiconductor Company ARM Orders Halt to Business with Huawei

British semiconductor company ARM has ordered its employees to cease all business with Huawei after the US put the Chinese tech company on a trade blacklist last week.

ARM Halts All Work with Huawei

In a new report by the BBC, UK's ARM, a widely relied upon source for semiconductor technology in mobile devices, has instructed all it’s employees to cease doing business with Huawei after the company determined that the designs of its processors might contain “US origin technology” and would be forced to abide by the US trade blacklisting of the Chinese tech giant.

A majority of the mobile devices in the world rely on ARM technology for their processors, making them an essential supplier for any telecommunications technology for the foreseeable future, especially as the worldwide rollout of 5G communications technology gets underway this year.

"ARM is the foundation of Huawei’s smartphone chip designs, so this is an insurmountable obstacle for Huawei,” said CCS Insight's Geoff Blaber. "That said, with an abundance of companies in Huawei’s supply chain already having taken action to comply with the US order, Huawei’s ability to operate was already severely affected.”

The implications go beyond ARM, however. It isn't clear whether the company is correct in its assessment of its exposure to liability when dealing with Huawei, or whether it interpreted this exposure on their own or received instructions from the US Commerce Department, which oversees trade-related matters, but if ARM risks running afoul of US trade restrictions in its dealings with Huawei, semiconductor technology companies around the world would likely be affected too.

"If that interpretation is correct, that’s going to affect every semiconductor company in the world,” said IHS Markit's Lee Ratliff. "They’re not going to be able to easily replace these parts with new, in-house designs - the semiconductor industry in China is nascent.”

Rollout of 5G Technology Implicated in Dispute

One of the major flashpoints in the ongoing dispute between the US government and Huawei has been Huawei's offering to license its technology to companies and governments of Western nations as part of the worldwide rollout of 5G networks over the next year and a half.  If the ARM interpretation is backed by the US government with the threat of legal action, this could greatly complicate and even delay the building of these networks.

"The problem of the whole telecoms industry is that so much of it is based on the exchange of technology between different companies," said Alan Burkitt-Gray, the editor-at-large for telecommunications news site Capacity Media, "whether that's chip companies, software providers or the makers of other hardware."

The biggest issue is the reciprocal-licensing that takes place in every area of technology now. No company builds it's products from the ground up in its entirety, they often rely on others whose specialty is one particular component, while they may license their own technology to others down the road. Cutting off Huawei as they have, the US government has also cut off Western companies from licensing necessary technology from Huawei, much of it related to 5G networking technology.

"This will carve out a chasm in the industry between Huawei-originated intellectual property and the rest of the world's," said Burkitt-Gray. "It's just a total mess and it's happened at a critical time for the rollout of 5G."