Panasonic halts some component shipments to Huawei

Panasonic said it was halting shipments of some components to Huawei that would fall under the proposed US export restrictions, in the latest setback for the Chinese telecoms equipment maker.

After an earlier statement sparked turmoil in China, the company released a second statement late on Thursday saying its business operations with Huawei that did not violate the US ban were "still ongoing".

A person close to the company said few of its products would actually breach the US ban, adding that the firm had yet to halt any business transactions with Huawei.

The decision comes as companies across Japan's tech sector, including SoftBank, Toshiba and Murata Manufacturing, are still scrambling to assess the impact of the US ban issued last week.

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Some clarity

Still, investors in Huawei were given some clarity after Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, said on Thursday that it would continue to ship to HiSilicon, Huawei's chip design affiliate.

The decision averts a worst-case scenario under which Huawei would have been unable to replace at least some semiconductors it can no longer buy from US suppliers with products developed in-house.

Many semiconductor companies in third countries are scrambling to determine whether their use of US-made equipment, software tools or patents will subject further sales to Huawei to a US export licence – which in many cases is likely to be denied.

Export control

Under Washington’s export control guidelines, third-country suppliers to blacklisted entities need to apply for licences if US content exceeds 25 per cent of the value of their products or services. According to industry executives, it remains unclear whether Washington intends to count US-made machinery as part of that calculation in the Huawei case.

In a statement earlier in the day, Panasonic, which makes car batteries, smartphone components and other devices, said it had sent an “internal notification that it should suspend transactions with Huawei and its 68 affiliates that were banned by the US government”.

The Chinese group declined to comment on Panasonic’s decision.

Other Japanese suppliers for Huawei include Sony, which makes image sensors, and Japan Display, which makes smartphone screens.

Shares in Panasonic fell as much as 1.4 per cent on Thursday. – Copyright The Financial Times Limited 2019