U.S. crackdowns on Huawei prompt chip stockpiling, proposed aid not enough
U.S. President Donald Trump’s restrictions on China’s Huawei Technologies Co Ltd have sparked widespread stockpiling of unsold product across the chip industry, and Washington’s proposed aid to bolster the sector falls far short of what is needed to fill the gap, an analyst told Reuters.
“Under the surface, there’s been lots of inventory
build-up,” Dan Hutcheson, chief executive officer of VLSI Research, told the
Reuters Global Markets Forum on Monday.
“We’re seeing integrated circuit inventory levels that are
more typical in front of a downturn.”
The Trump administration tightened restrictions on Huawei
earlier in August, banning suppliers from selling chips made using U.S.
technology to the Chinese telecom giant without a special license.
Amid this rivalry with China, efforts to bolster U.S. semiconductor
companies and shift the center of manufacturing away from Asia are underway.
Legislation introduced in the U.S. Senate would provide more
than $22.8 billion to domestic semiconductor manufacturers, but Hutcheson said
it is less than half the amount required.
“[It] really lacks the funding levels needed ... $50 billion
is more likely to have the desired result,” Hutcheson said.
U.S. chip suppliers could see a boost in demand if the Trump
administration’s restrictions tighten Chinese supply, Hutcheson added.
“The bigger issue is if they get locked out of China’s
market, while the door remains open for other countries,” he said.
Despite geopolitical setbacks, VLSI forecasts 7% global
growth for the semiconductor industry in 2020, as coronavirus-prompted shifts
to a “work at home” economy drive demand for electronics.
“The pandemic has restructured the economy to a level not
seen since WWII,” Hutcheson added.
“We see it (the chip industry) adding 4% to 6% additional
annual growth for several years.”
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