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Huawei says it’s running out of chips for its smartphones because of US sanctions

Chinese tech giant Huawei is running out of processor chips to make smartphones because of U.S. sanctions and will be forced to stop production of its own most advanced chips, a company executive says, in a sign of growing damage to Huawei’s business from American pressure.

Huawei Technologies Ltd. one of the biggest producers of smartphones and network equipment, is at the center of U.S.-Chinese tension over technology and security. The feud has spread to include the popular Chinese-owned video app TikTok and China-based messaging service WeChat.

The US has accused Huawei of building backdoors into network infrastructure, ostensibly to aid Chinese government spying efforts. Huawei has denied the Trump administration’s accusations of spying. But the Trump administration placed Huawei and 114 of its affiliates on its Entity List in May 2019, which meant US firms were unable to sell technology to the company without explicit US government approval.

The US is also is lobbying European and other allies to exclude Huawei from planned next-generation networks as a security risk.

Production of Kirin chips designed by Huawei’s own engineers will stop September 15 because they are made by contractors that need U.S. manufacturing technology, said Richard Yu, president of the company’s consumer unit. He said Huawei lacks the ability to make its own chips.

“This is a very big loss for us,” Yu said Friday at an industry conference, China Info 100, according to a video recording of his comments posted on multiple websites.

“Unfortunately, in the second round of U.S. sanctions, our chip producers only accepted orders until May 15. Production will close on September 15,” Yu said. “This year may be the last generation of Huawei Kirin high-end chips.”

More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.

Yu said this year’s smartphone sales probably will be lower than 2019’s level of 240 million handsets but gave no details.

Despite the ban in the US, earlier this year, Huawei bested Samsung as the world’s biggest smartphone seller, shipping more phones between April and June than any other company, according to analyst firm Canalys.

The Wall Street Journal reported Saturday that American chipmaker Qualcomm had asked the Trump administration to ease the restrictions on the sale of components to Huawei, and allow it to sell chips to Huawei for use in its 5G phones.

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