The Trump administration is facing major pressure from Qualcomm Inc. The company is asking permission from the Trump administration to allow it to sell components to Huawei Technologies Co. They stated that the current restrictions risk channeling revenue to foreign competitors rather than preventing the Chinese company from obtaining the parts.
What is the problem faced by Qualcomm?
The company Qualcomm needs the permission of the United States to sell chips to Huawei that would be used in the 5G phones. They say that they i.e., the U.S. chipmakers, are required to obtain a license from the Commerce Department to ship certain components to Huawei. This is tough to do in this pandemic period.
Qualcomm also mentions that due to the strict restrictions, the foreign competitors have access to the market that is worth $8 billion each year. And, that can result in enormous losses for the U.S. based chipmakers and decrease the competition for other foreign competitors. It also highlights that Taiwan’s MediaTek Inc. and South Korea’s Samsung Electronics Co.; are among those foreign competitors companies that are benefiting from the redirected revenue stream.
On this, there were no comments from Samsung; but MediaTek said that its investment in 5G technology has allowed it to win customers globally. Though, it didn’t mention the name of any specific companies.
Qualcomm quoted, “If Qualcomm is subject to export licensing, but its foreign competitors are not; U.S. government policy will cause a rapid shift in 5G chipset market shares in China and beyond.”
It also called it an unacceptable outcome for U.S. interests, as it is automatically going to be an obstacle on the way of American research and leadership on 5G issues.