SHANGHAI: The latest U.S. government action against China’s Huawei takes direct aim the company’s HiSilicon chip division-a business that in a few short years has become central to China’s ambitions in semiconductor technology but will now lose access to tools that are central to its success.
That could make it the most damaging U.S. attack yet against a Chinese company that U.S. officials told reporters Wednesday functioned as a “tool of strategic influence” for the Chinese Communist Party. Huawei Technologies Co Ltd for its part denounced the U.S. allegations and called the new measures “arbitrary and pernicious.”
Established in 2004, HiSilicon develops chips mostly for Huawei, and for most of its existence has been an afterthought in a global chip business dominated by U.S., Korean and Japanese companies. Like most electronics firms, Huawei relied on others for the chips that powered its equipment.
But heavy investment in research and development helped drive rapid progress at HiSilicon, and in recent years the 7,000-employee unit has been central to Huawei’s rise as a dominant player in the global smartphone business and the emerging 5G telecom networking business.
HiSilicon’s Kirin smartphone processor is now considered to be on par with those created by Apple and Qualcomm – a rare example of an advanced Chinese semiconductor product that competes globally.
HiSilicon is also central to Huawei’s leadership in 5G, stepping into the breach when the United States cut off access to some U.S. chips last year.
In March, Huawei revealed that 8 per cent of the 50,000 5G base stations it sold in 2019 came with no U.S. technology, using HiSilicon chipsets instead.
But the U.S. export control rule, first reported by Reuters last week, aims to block HiSilicon’s access to two crucial tools: chip design software from U.S. firms including Cadence Design Systems and Synopsys, and the manufacturing prowess of “foundries,” led by Taiwan Semiconductor Manufacturing, that build chips for many of the world’s top semiconductor firms.
With the new restrictions, HiSilicon “will be in a situation where they’re not able to manufacture chips at all, or if they do, then they’re not leading edge anymore,” says Stewart Randall, who tracks China’s chip industry at Shanghai-based consultancy Intralink.
Without its own processors, Huawei will lose its edge over domestic smartphone rivals, analysts said. International sales had already been gutted by a ban on the use of key Google software.
Industry sources say Huawei has stockpiled chips, and the new U.S. rule will not go into full force for 120 days. U.S. officials also note that licenses could be granted for some technologies. HiSilicon can also keep using design software it has already acquired.
HILSILICON IN TOUGH SPOT
Still, analysts agree HiSilicon is in a tough spot. Nearly all chip factories globally – including China’s leading foundry, Semiconductor Manufacturing – buy gear from the same equipment makers, led by U.S. firms Applied Materials, Lam Research and KLA.
The new U.S. rule requires licenses for companies using U.S. machinery to build Huawei-designed chips and delivered to the Chinese firm. To be sure, the new rule will not catch items shipped to a third party, allowing HiSilicon’s fabricators like TSMC the ability to ship chips to HiSilicon’s device manufacturers who can send them directly to a customer.
While there are alternatives to American machines – Japan’s Tokyo Electron, for example, makes gear that competes with Applied Materials – replacing U.S. technology is not as simple as swapping out a machine.
“You almost have to think about it like a heart transplant,” said VLSI Research Chief Executive Dan Hutcheson, noting that chip production lines are finely calibrated systems where everything has to work well together.
Doug Fuller of the Chinese University of Hong Kong said Huawei had a few options. It could slip around the rule by having suppliers ship directly to Huawei customers, though the U.S. officials said they would be vigilant about such workarounds.
Huawei and the Chinese government could re-double efforts to build production capabilities that did not require U.S. tools, by investing in nascent Chinese competitors and buying from Japanese and Korean firms, even if that required quality sacrifices.
Or Huawei could turn away from HiSilicon and revert to buying from overseas suppliers – just not American ones. “There’s talk of Huawei just turning to Samsung processors,” for its smartphone, said Fuller.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
