WASHINGTON (Reuters) – The Trump administration on Friday moved to block global chip supplies to blacklisted telecoms equipment giant Huawei Technologies [HWT.UL], spurring fears of Chinese retaliation and hammering shares of U.S. producers of chipmaking equipment.
A new rule, unveiled by the Commerce Department and first reported by Reuters, expands U.S. authority to require licenses for sales to Huawei of semiconductors made abroad with U.S. technology, vastly expanding its reach to halt exports to the world’s No. 2 smartphone maker.
“This action puts America first, American companies first, and American national security first,” a senior Commerce Department official told reporters in a telephone briefing on Friday.
Huawei, the world’s top telecoms equipment maker, did not respond to a request for comment.
News of the move against the firm hit European stocks as traders sold into the day’s gains, while shares of chip equipment makers like Lam Research (LRCX.O) and KLA Corp (KLAC.O) fell around 5 and 3 percent, respectively, in U.S. trading.
The reaction from China was swift, with a report on Friday by China’s Global Times saying Beijing was ready to put U.S. companies on an “unreliable entity list,” as part of countermeasures in response to the new limits on Huawei.
The measures include launching investigations and imposing restrictions on U.S. companies such as Apple Inc (AAPL.O), Cisco Systems Inc (CSCO.O) and Qualcomm Inc (QCOM.O), as well as suspending purchase of Boeing Co (BA.N) airplanes, the report said here citing a source.
The Commerce Department’s rule, effective Friday but with a 120-day grace period, also hits Taiwan Semiconductor Manufacturing Co Ltd (2330.TW), the biggest contract chipmaker and key Huawei supplier, which announced plans to build a U.S.-based plant on Thursday.
TSMC said on Friday