ARM Suspends Dealings With Huawei Report

The UK's ARM has reportedly become the latest company to suspend dealings with Huawei after the US government hit the Chinese equipment maker with trade sanctions last week.

According to an internal memo seen by the BBC, ARM staff have been instructed to halt "all active contracts, support entitlements, and any pending engagements" with Huawei and its subsidiaries.

If confirmed, the move would deal a massive blow to Huawei because ARM's semiconductor designs are used in most of the world's smartphone processors.

Huawei has previously emphasized the importance of its business relationship with the chip designer, which was acquired in 2016 by Japan's SoftBank in a $32 billion deal.

Having started out as a manufacturer of network equipment, Huawei has moved into the smartphone sector in recent years and last year overtook Apple to become the world's second-largest smartphone vendor, behind South Korea's Samsung.

The BBC's report comes after some of Huawei's best-known US suppliers, including Intel, Qualcomm and Broadcom, recently froze out the Chinese vendor in response to moves by US President Donald Trump and the US Commerce Department.

An executive order issued last week allows US officials to block any transaction developed by a foreign adversary. While Huawei is not named in the White House statement, the industry has interpreted the order as an attack on the Chinese vendor, seen as a threat to national security by Western critics.

Huawei's name has also been added to the US Commerce Department's Entity List. US companies cannot ship technology to anyone named on that list without obtaining a license from the Commerce Department's Bureau of Industry and Security, which can deny requests it sees as harmful to US interests.

The ARM memo obtained by the BBC says the company's designs contain "US origin technology," explaining the decision to suspend any dealings with Huawei.

"We value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions," said a Huawei spokesperson in emailed comments. "We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world."

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Huawei's smartphone business is reeling after Google said it would stop providing parts of the Android operating system to the Chinese company in response to US government moves.

Earlier today, UK telecom incumbent BT confirmed that it would not sell Huawei's 5G smartphones until it has more confidence about the level of support customers will receive. Vodafone is reported to have taken similar steps.

Leading smartphone analysts have warned the US measures may cripple Huawei's smartphone business outside China.

Paolo Pescatore, a tech, media and telco analyst with PP Foresight, today warned that consumer concern about Huawei could hinder 5G adoption.

"Consumers are starting to be wary about Huawei products and quite possibly other Chinese products," he said. "This will have a negative impact on 5G consumer take-up in the short term."

US authorities this week issued temporary licenses to Huawei's suppliers to avoid any immediate disruption, but those are set to expire in 90 days.

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Iain Morris, International Editor, Light Reading

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