FILE PHOTO: Workers set up a Panasonic booth at the Las Vegas Convention Center in preparation for 2019 CES in Las Vegas, Nevada, U.S. January 6, 2019. REUTERS/Steve Marcus/File Photo

TOKYO (Reuters) - Japan’s Panasonic Corp said on Thursday it has stopped shipments of certain components to Huawei Technologies to comply with U.S. restrictions on the Chinese company.

“Panasonic has instructed employees to halt transactions with Huawei and its 68 affiliates covered by the U.S. ban,” the company said in a statement.

The Osaka-based company does not have a major production site for components in the United States, but it said the ban applies to goods having 25% or more of U.S.-originated technologies or materials.

The company, which makes a wide range of devices for smartphones, cars and factory automation equipment, declined to comment on which components are subject to the ban and where they are produced.

The U.S. Commerce Department blocked Huawei from buying U.S. goods last week, saying the firm was involved in activities contrary to national security.

The United States temporarily eased the restrictions on Huawei on Monday, to minimize disruption for customers. </s> Japan's Panasonic said Thursday it would stop supplying some components to Huawei, joining a growing list of firms distancing themselves from the Chinese telecoms giant after a US ban over security concerns.

Japan's Toshiba also announced it was temporarily halting shipments to Huawei to check whether US-made parts were involved, in order to comply with Washington's new restrictions.

The moves came a day after major Japanese and British mobile carriers said they would delay releasing new Huawei handsets, upping the pressure on the world's second-largest smartphone manufacturer.

In an official statement emailed to AFP, Panasonic said it had announced in an "internal notification" that it would "suspend transactions with Huawei and its 68 affiliates that were banned by the US government".

It declined to comment on "other transactions that are not banned by the US".

Asked about its opinion about the news, Huawei pointed to a statement on Panasonic's Chinese website that said the firm was supplying Huawei "normally" and doing so "strictly abiding by the relevant laws and regulations of countries and regions where Panasonic is present".

Washington's restrictions affect products made fully or partially in the United States, where Panasonic manufactures some of its components.

Toshiba meanwhile said it had temporarily halted shipments to Huawei while it checks if they include US-made parts.

"We will resume shipments if we confirm our products don't use American-made parts," spokesman Takashi Ebina told AFP.

Economic bullying'

Last week, Donald Trump declared a national emergency to bar US companies from using foreign telecoms equipment deemed a security risk.

The move appeared aimed at Huawei, though the White House said no particular company or country was targeted.

The Commerce Department has also announced an effective ban on US companies selling or transferring US technology to Huawei.

The moves have prompted a parade of firms to step back from dealings with Huawei, including Google, whose Android operating system powers most of the world's smartphones.

And on Wednesday, mobile carriers in Japan and Britain said they were delaying releases of Huawei handsets.

China's Foreign Minister Wang Yi denounced the US moves and said Beijing would "fight to the very end" in its trade war with Washington.

"The US use of state power to arbitrarily exert pressure on a private Chinese company like Huawei is typical economic bullying," Wang said Wednesday at a meeting in Kyrgyzstan.

Telecoms giant EE, owned by BT, had been due to bring Huawei's first 5G phone, the Huawei Mate 20X, to Britain, but chief executive Marc Allera said Wednesday the company had "paused" the launch.

The delay would last "until we get the information and confidence and the long-term security that our customers... are going to be supported", he said.

The group also said it would phase out the use of Huawei equipment in the most sensitive "core" elements of its network infrastructure.

Vodafone soon followed suit, announcing a temporary suspension of pre-orders for Huawei handsets.

And the BBC reported British firm ARM, which designs processors used in most mobile devices, would also cut ties with Huawei

Huawei said Wednesday that it recognised "the pressure" placed on its suppliers, and that it was "confident this regrettable situation can be resolved".

In Japan, KDDI and SoftBank Corp, the country's number-two and number-three carriers respectively, said they were delaying the release of Huawei handsets.

And the country's top carrier said it would suspend pre-orders for a new phone from the Chinese firm.

While Trump's order effectively bans US companies from selling Huawei and affiliates critical components, US officials offered a brief reprieve this week by delaying the ban for 90 days to avoid major disruption.

Analysts say the restrictions could be seriously damaging for the Chinese firm, with the pullback by Google and ARM likely to be "particularly troubling" for the telecoms giant.

"How the US ban on business with Huawei will impact the Chinese firm's performance is at this point unclear, but what is clear to me is that its sales will be negatively affected," said Hiroyuki Kubota, an independent financial analyst.

Washington has long suspected deep links between Huawei and the Chinese military, and its moves against the company come amid the churning trade dispute between the world's top two economies. </s> Beijing on Friday accused the United States of spreading "lies" about Huawei after Secretary of State Mike Pompeo said the telecom giant was not being truthful about its ties to the Chinese government.

Huawei has been thrust at the centre of escalating tensions between the world's two top economies, with President Donald Trump saying Thursday the fate of the company could be included in any deal to resolve their trade war.

Chinese foreign ministry spokesman Lu Kang said he was not aware of the "specifics" of Trump's comments and repeated that dialogue must be based on "mutual respect".

The Trump administration has infuriated Beijing by blacklisting the smartphone and telecommunications company over worries that China uses it as a tool for espionage and allegations.

Huawei has repeatedly denied that it works with the Communist-led government.

"To say that they don't work with the Chinese government is a false statement," Pompeo told CNBC.

Lu said US politicians have spread rumours about Huawei without providing evidence.

"These American politicians continue to fabricate various subjective, presumptive lies in an attempt to mislead the American people, and now they are trying to incite ideological opposition," he said at a regular press briefing.

The heated rhetoric comes as trade negotiations have stalled, with neither side announcing a new date to resume talks after they exchanged increases in tariffs earlier this month.

But Trump said Thursday there was a "good" possibility that the two sides will strike a bargain.

"If we made a deal, I can imagine Huawei being included in some form or some part of a trade deal," he said, linking the company to the wider trade dispute.

Panasonic joins firms stepping away from Huawei after US ban

Japan's Panasonic said Thursday it would stop supplying some components to Huawei, joining a growing list of firms distancing themselves from the Chinese telecoms giant after a US ban over security concerns.

Japan's Toshiba also announced it was temporarily halting shipments to Huawei to check whether US-made parts were involved, in order to comply with Washington's new restrictions.

The moves came a day after major Japanese and British mobile carriers said they would delay releasing new Huawei handsets, upping the pressure on the world's second-largest smartphone manufacturer.

In an official statement emailed to AFP, Panasonic said it had announced in an "internal notification" that it would "suspend transactions with Huawei and its 68 affiliates that were banned by the US government".

It declined to comment on "other transactions that are not banned by the US".

Asked about its opinion about the news, Huawei pointed to a statement on Panasonic's Chinese website that said the firm was supplying Huawei "normally" and doing so "strictly abiding by the relevant laws and regulations of countries and regions where Panasonic is present".

Washington's restrictions affect products made fully or partially in the United States, where Panasonic manufactures some of its components.

Toshiba meanwhile said it had temporarily halted shipments to Huawei while it checks if they include US-made parts.

"We will resume shipments if we confirm our products don't use American-made parts," spokesman Takashi Ebina told AFP.

Last week, Donald Trump declared a national emergency to bar US companies from using foreign telecoms equipment deemed a security risk.

The move appeared aimed at Huawei, though the White House said no particular company or country was targeted.

The Commerce Department has also announced an effective ban on US companies selling or transferring US technology to Huawei.

The moves have prompted a parade of firms to step back from dealings with Huawei, including Google, whose Android operating system powers most of the world's smartphones.

And on Wednesday, mobile carriers in Japan and Britain said they were delaying releases of Huawei handsets.

China's Foreign Minister Wang Yi denounced the US moves and said Beijing would "fight to the very end" in its trade war with Washington.

"The US use of state power to arbitrarily exert pressure on a private Chinese company like Huawei is typical economic bullying," Wang said Wednesday at a meeting in Kyrgyzstan.

Telecoms giant EE, owned by BT, had been due to bring Huawei's first 5G phone, the Huawei Mate 20X, to Britain, but chief executive Marc Allera said Wednesday the company had "paused" the launch.

The delay would last "until we get the information and confidence and the long-term security that our customers... are going to be supported", he said.

The group also said it would phase out the use of Huawei equipment in the most sensitive "core" elements of its network infrastructure.

Vodafone soon followed suit, announcing a temporary suspension of pre-orders for Huawei handsets.

And the BBC reported British firm ARM, which designs processors used in most mobile devices, would also cut ties with Huawei.

Huawei said Wednesday that it recognised "the pressure" placed on its suppliers, and that it was "confident this regrettable situation can be resolved".

In Japan, KDDI and SoftBank Corp, the country's number-two and number-three carriers respectively, said they were delaying the release of Huawei handsets.

And the country's top carrier said it would suspend pre-orders for a new phone from the Chinese firm.

While Trump's order effectively bans US companies from selling Huawei and affiliates critical components, US officials offered a brief reprieve this week by delaying the ban for 90 days to avoid major disruption.

Analysts say the restrictions could be seriously damaging for the Chinese firm, with the pullback by Google and ARM likely to be "particularly troubling" for the telecoms giant.

"How the US ban on business with Huawei will impact the Chinese firm's performance is at this point unclear, but what is clear to me is that its sales will be negatively affected," said Hiroyuki Kubota, an independent financial analyst.

Washington has long suspected deep links between Huawei and the Chinese military, and its moves against the company come amid the churning trade dispute between the world's top two economies. </s> BEIJING/WASHINGTON
• China has said that the United States needs to correct its "wrong actions" for trade talks to continue after it blacklisted Huawei, a blow that has rippled through global supply chains and battered shares as investors fear a technology cold war.

Japanese conglomerate Panasonic joined the growing list of global companies which have disengaged from Huawei Technologies, the world's second-largest seller of smartphones and the largest telecoms equipment maker, saying that it has stopped shipments of some components.

Its move came a day after British chip designer ARM said it had halted relations with Huawei to comply with the US supply blockade, potentially crippling the Chinese firm's ability to make new chips for smartphones. Huawei uses ARM blueprints to design the processors that power its smartphones. ARM's chip designs contain technology of US origin and are the backbone of Huawei handsets.

"If the US wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect," Chinese Commerce Ministry spokesman Gao Feng told a weekly briefing yesterday.

"We will closely monitor relevant developments and prepare necessary responses."

The US has accused Huawei of working for the Chinese government and of activities contrary to national security, accusations Huawei denies. The Trump administration softened its stance slightly this week by granting the firm a licence to buy US goods until Aug 19 to minimise disruption for customers.

Washington is lobbying Britain not to use Huawei's products, and yesterday, South Korean newspaper Chosun Ilbo reported that similar pressure was being placed on Seoul. China is South Korea's biggest export market.

US Secretary of State Mike Pompeo told CNBC yesterday that Huawei was lying about ties to the Beijing government, and he believed more US firms would cut relations with the technology giant.

The US blacklist has already jeopardised Huawei's ties with Alphabet's Google, which provides the Android operating system and services such as Gmail, as well as hardware partners.

Huawei founder Ren Zhengfei told Chinese financial magazine Caixin yesterday that he did not see ARM's decision to suspend business with Huawei as having an impact on the company.

He said Huawei had a long-term agreement with ARM, and speculated that the British firm had made such a move because its parent, SoftBank Group, was waiting for US approval for the merger of Sprint, which it owns, and T-Mobile US.

Meanwhile, TSMC, the world's biggest contract chipmaker, said yesterday that its shipments to Huawei were not affected by the US order. Toshiba also said it had resumed some shipments to Huawei after temporarily suspending shipments to check whether they included US-made components.

A spokesman for China's Foreign Ministry reiterated that China's door was always open for talks, but that the situation with Huawei and other Chinese technology firms targeted by the US made this difficult.

"Relevant US actions obviously do not create a good atmosphere or environment for consultations," spokesman Lu Kang said at a separate briefing in Beijing.

No further trade talks between top Chinese and US negotiators have been scheduled since the last round ended on May 10, the same day US President Donald Trump sharply increased tariffs on US$200 billion (S$276 billion) worth of Chinese goods and took steps to levy duties on all remaining Chinese imports.

China has retaliated with its own levies on US imports, but it was Washington's subsequent move against Huawei that took the trade war into a new phase, stoking fears about risks to global growth and knocking financial markets. REUTERS

SEE OPINION: Huawei ban - a demonstration of US economic power </s> Japan’s Panasonic said it was halting business with Huawei to comply with US restrictions.

Panasonic said the ban applies to goods having 25% or more of US-originated materials, according to reports.

However, there was some confusion about Panasonic’s position when, later in the day, its Chinese website said the firm would continue to supply Huawei.

Last week the US put Huawei on a list of companies that American firms cannot trade with unless they have a licence.

The restrictions mark an escalation in US efforts to block Huawei, which it says poses a security risk.

Trump declares emergency over IT threatsThe storm over HuaweiThe next US-China battleground

“Panasonic announced in [an] internal notification that it should suspend transactions with Huawei and its 68 affiliates that were banned by the US government,” the firm said in a statement provided to the BBC.

Later on Thursday, Panasonic appeared to contradict that position with a statement posted on its China website that said the Japanese company was continuing to supply Huawei.

Panasonic did not immediately respond to BBC requests for clarity.

It was also not clear what transactions Panasonic was suspending, or why they were subject to US restrictions. </s> 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.

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.

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 </s> Google says it will stop offering Android updates for phones made by the Chinese telecom company Huawei. The move follows a U.S. executive order that American companies stop doing business with any foreign company that harms national security interests.

Google, owned by Alphabet, "has suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing," Reuters first reported. In a statement, Google confirmed the news: "We are complying with the order and reviewing the implications," a spokesperson said, according to CNBC.

In practice, this means Huawei won't be able to license Google's Android operating system, so Huawei phone users will lose access to updates. Future versions of Huawei smartphones running Android won't be able to access popular Google apps including Gmail, YouTube, and the Google Play store – which lets users easily download third-party apps.

Huawei is one of the world's largest smartphone suppliers, second only to Samsung. In losing access to the latest Google software, Huawei may find it difficult to compete in the global smartphone market, CNN reports.

Google isn't the only company cutting ties with Huawei. American chipmakers such as Intel, Qualcomm and Broadcom have told their employees that they will stop supplying Huawei, Bloomberg reported. And the Nikkei Asian Review reported that the German chipmaker Infineon has also stopped shipments to Huawei.

The Trump administration last week restricted the sale of U.S. technology which seemed aimed at Huawei. An executive order signed by the president declared a "national emergency" and blocked U.S. companies from doing business with foreign tech companies that pose "an unacceptable risk to the national security of the United States." The Commerce Department said it would add Huawei and its subsidiaries to a list of companies generally prohibited from buying U.S. technology.

Huawei, which has denied allegations that it spies on its users, says it has been preparing for the possibility that it might lose access to American companies. In March, Richard Yu, CEO of Huawei's consumer products division, told a German newspaper that Huawei had prepared its own operating system in case it lost access to Android. "That's our plan B," Yu said. "But of course we prefer to work with the ecosystems of Google and Microsoft." The company has stockpiled enough chips to keep its phone business running for months, Bloomberg reports.

According to Ryan Koontz, an analyst with Rosenblatt Securities Inc., the U.S. ban could have a major impact on China's ability to build 5G networks, as Huawei is dependent on U.S. components like semiconductors.

"The extreme scenario of Huawei's telecom network unit failing would set China back many years and might even be viewed as an act of war by China," Koontz told Bloomberg. "Such a failure would have massive global telecom market implications." </s> Alphabet Inc's Google has suspended business with Huawei that requires the transfer of hardware and software products except those covered by open source licenses, a source close to the matter told Reuters on Sunday, in a blow to the Chinese technology company that the U.S. government has sought to blacklist around the world.

Huawei Technologies Co Ltd will immediately lose access to updates to the Android operating system, and the next version of its smartphones outside of China will also lose access to popular applications and services including the Google Play Store and Gmail app.

Details of the specific services were still being discussed internally at Google, according to the source. Huawei attorneys are also studying the impact of the U.S. Commerce Department's actions, a Huawei spokesman said on Friday. Huawei was not immediately reachable for further comment.

Representatives of the u.s. Commerce Department did not immediately have comment.

Huawei will continue to have access to the version of the Android operating system available through the open source license that is freely open to anyone who wishes to use it.

But Google will stop providing any technical support and collaboration for Android and Google services to Huawei going forward, the source said.

On Thursday the Trump administration officially added Huawei to a trade blacklist, immediately enacting restrictions that will make it extremely difficult for the technology giant to do business with U.S. companies.

Also read: Huawei P30 Pro goes on sale in India on Amazon; check price, offers, details

Also read: Huawei P30 Pro, P30 Lite launch at 12pm today: How to livestream event, price in India, specs </s> The U.S. government is urging allied nations to avoid using telecommunications equipment from China’s Huawei Technologies Company, even though some of those countries have already made large purchases of Huawei equipment, according to a report published Friday.

The U.S. has expressed concerns that Chinese military and intelligence units have compromised Huawei products, posing security risks.

The Wall Street Journal reported on Friday that U.S. officials are concerned about host countries using Huawei equipment in close proximity to American military bases and about Chinese tech compromising the security of next-generation 5G wireless networks. The U.S. military has some dedicated equipment for its most sensitive communications, but a great deal of the communications traffic from American installations in foreign countries passes through local telecom networks.

American officials are offering detailed briefings on the security risks posed by Chinese equipment:

The briefings are aimed at dissuading governments and telecom executives from using Huawei network components in both government and commercially operated networks. A core focus of the briefings is Beijing’s ability to force Chinese corporations to comply with government requests from government authorities, a U.S. official said. The talking points also emphasize how wireless and internet networks in a few years could be more susceptible to cyberattacks or espionage, people familiar with the briefings said. Today’s cellular-tower equipment, for instance, is largely isolated from the “core” systems that transfer much of a network’s voice and data traffic. But in the 5G networks telecom carriers are preparing to install, cellular-tower hardware will take over some tasks from the core—and that hardware could potentially be used to disrupt the core via cyberattacks. For that reason, U.S. officials worry that Huawei or ZTE cellular-tower equipment could compromise swaths of a telecom network. Huawei is the world’s No. 2 smartphone maker behind Samsung Electronics Co. It is the global leader for telecom equipment, such as the hardware that goes into cellular towers, internet networks and other infrastructure that enables modern communication. The company has been all but shut out of that market in the U.S. after a 2012 congressional report labeled it a national-security threat. American officials say the company could be compelled by Beijing to use its knowledge of its components to snoop on or disrupt telecommunications networks.

The Journal noted American officials are not alone in these concerns. Australia has already banned Huawei and another Chinese company, ZTE, from participating in its 5G network, while the U.K. is conducting a telecom security review that does not specifically name any companies but may be motivated by concerns about Huawei, whose products are popular in Britain. The WSJ article also mentions a “new wariness” toward Huawei in Germany and the possibility of restrictions on its products in Japan.

Unfortunately for concerned U.S. policymakers, Chinese technology is already well established in many allied countries. Italian telecom executives reportedly told U.S. officials they simply cannot stop using Huawei and ZTE products because the Chinese equipment is inexpensive and flexible. A British telecom executive described Huawei as the “only true 5G supplier right now” to the Journal.

Reuters reported on Friday that Huawei has signed 22 commercial contracts for 5G networks so far and is opening an information security lab in Germany to help defuse security concerns before auctions for 5G network spectrum next year.

A group of senior German officials is mounting a last-ditch effort to ban Chinese companies from the 5G project. The German foreign and interior ministries are said to be especially concerned about Chinese participation after speaking with their counterparts in the United States and Australia.

“There is serious concern. If it were up to me we would do what the Australians are doing,” one German official said, referring to Australia’s ban on Huawei and ZTE. Even the German left, which is generally opposed to freezing entire countries out of German markets, has expressed apprehension about Huawei and pointed to Chinese cybersecurity laws that literally require all Chinese companies to “collaborate in national intelligence work.”

Huawei has consistently denied allegations that it works with Chinese intelligence and issued such a response to the Journal piece on Friday:

No Chinese corporation has a good answer to the simple truth that Chinese law absolutely requires them to work with Beijing’s military and intelligence operations upon demand. Even if it were true that Huawei is not currently injecting backdoors and other security flaws into its products for the benefit of Chinese intelligence, the government could compel it to do so tomorrow and arrest its executives instantly if they hesitated to comply.

The Wall Street Journal reported on Friday that stocks in Chinese tech companies are dropping as a result of the U.S. campaign against them, and indeed because of the Journal’s own reporting on that campaign. Conversely, the shares of European competitors to Huawei and ZTE such as Ericsson and Nokia are rising as the looming possibility of bans or caps on Chinese products creates market opportunities for them. The Chinese government has denounced U.S. warnings about the security of Huawei and ZTE products as protectionist schemes to suppress Chinese competition and create market share for American and European companies.
Panasonic suspends shipments of certain hardware components to Huawei Technologies Co. Ltd. to comply with U.S. restrictions on the company.