China won’t sit and watch Huawei get ‘slaughtered,’ exec says as the US reportedly preps new sanctions

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Beijing will not sit and watch Huawei get “slaughtered” and could retaliate if there are further sanctions on the Chinese technology giant, a top Huawei executive told CNBC on Tuesday.

The comments came in response to a Reuters report that suggested senior officials in the Trump administration had drawn up new rules that would require chipmakers to obtain a license if they use American equipment to make components sold to Huawei.

The Reuters article, citing a source, said that the rule change is aimed at curbing the sale of chips from Taiwan Semiconductor Manufacturing Co (TSMC) to Huawei. TSMC makes chips that Huawei designs. 

In the company’s first comments on the issue, Eric Xu, rotating chairman at Huawei, suggested China would take retaliatory action if such a rule came to fruition.

Once the pandora box is opened, it would have devastating chain effect on global eco-system. Huawei would not be the only one to be destroyed.

Eric Xu: Rotating Chairman[Huawei]

The Chinese government would not sit there and watch Huawei being slaughtered. I believe there would be counter-measures. Xu said in Mandarin comments translated by CNBC.

The U.S. has argued that 5G equipment from China could be a national security risk. Xu argued that China could use that same logic for American devices using U.S. chips and block them from the Chinese market.

“If China takes counter-measures, the disruptive ripple effects on industries across the globe would be enormous. Once the pandora box is opened, it would have devastating chain effect on global eco-system. Huawei would not be the only one to be destroyed, ” Xu said, adding that American companies “wouldn’t be able to stay unscathed.”

The strong rhetoric highlights the potential damage such a rule change could have on Huawei. Last year, the company was put on a U.S. blacklist which restricted the way in which American firms could do business with Huawei. Some loopholes, however, allowed companies to still supply certain components to Huawei.