TSMC stands to lose over $5 billion in revenue because of the U.S. “rule change”
Even though this information comes from a source, the Global Times is published by the People’s Daily, the official newspaper of the Communist Chinese government. The Global Times is not an official government source but is believed to parrot the beliefs of the Chinese government.
The new rule from the Trump administration gives the U.S. control over Huawei’s supply of cutting-edge chips
He Weiwen, a former senior trade official and an executive council member of the China Society for World Trade Organization Studies, told the Global Times, “China should implement these countermeasures to the extent that the US dare not ask for a mile after being given an inch.” He says that China should perform thorough investigations into relevant U.S. companies and “let them feel the pain.”
Any retaliation against U.S. tech companies that results in their products being banned in China could force those American firms to take a big financial hit. During its fiscal second quarter, 14.8% of Apple’s revenue came from China. And many of China’s domestic phone manufacturers use Qualcomm’s Snapdragon chipsets and modem chips so the Chinese government needs to be careful that they don’t cut off its nose to spite its face. However, some Chinese phone manufacturers are supposedly working on their own chipsets.
An anonymous Chinese insider stated, “China will launch rounds of endless investigations on those firms, just like swords hanging over their head. It will dampen investors’ confidence and squeeze their income in the Chinese market.” The insider notes, “It will also inflict a chain reaction on various upstream and downstream players in US chip production.”
The Wall Street Journal says that a ban on U.S. chips in China could cost U.S. tech firms $36 billion in revenue. U.S. exports of chips to China still generate a trade surplus, one of the few business sectors that still do.
One person close to the Chinese government is Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing. According to Gao, the Chinese government will first punish small U.S. companies dependent on China. This, he says, could be a “first-level” warning to the U.S. before punishments are placed on bigger companies like Apple. Talking about the smaller firms he says, “They are vulnerable to restrictive measures. Once Chinese authorities impose sanctions on them, the cost is ill-afforded. Most small firms will be pushed to the brink of collapsing.”