Whither Huawei? 

Day 5 of the Huawei Technologies blacklist drama brings fresh speculation about what will happen to the company. While much focus has been on the loss of Google’s software, which includes its Android OS (not as serious as it sounds) and the Play Store (meaningless), pundits seem to still have no deeper insight into what comes next. Which is hardly surprising.

There is plenty of worrying news to counterbalance the Jedi-like aura emanating from the company’s Shenzhen HQ. It includes an interesting “exclusive” on SCMP today: Huawei is checking with its non-US suppliers to see if they will be affected by the blacklisting, too, as they may be using US products in the components that they, in turn, supply to Huawei.

Far more concerning is the piece published on SupChina, by the Eurasia Group’s Paul Triolo and Douglas Fuller of Hong Kong University, who write that things are worse for Huawei than it appears. Making their own microchips is one thing, they say. But the equipment to make the chips? In the duo’s own words:

“Focusing on the actual chips may be a mere sideshow. The tools needed to design chips, called electronic design automation (EDA) tools, are dominated by a small oligopoly of three firms: Cadence, Synopsys, and Siemens’ Mentor Graphics. Without these tools, it is basically impossible to design chips. Furthermore, given that these EDA tools draw upon repositories of decades of chemistry and material science knowledge, it is virtually impossible for new EDA entrants or existing small tool vendors to provide the quality of tools necessary for complex chip design. Cadence and Synopsys have already announced their plans to stop servicing Huawei and its affiliates. The U.S. government, in line with its laws on export controls, will likely argue that Mentor Graphics uses significant U.S. technology in its products so that it, too, falls under U.S. jurisdiction. Cutting off Huawei, its affiliates, and, potentially, others that attempt to supply Huawei with chips from access to these EDA tools would sound a death knell for the company.”

“We could be moving towards a worst-case scenario for Huawei,” Triolo and Douglas continue, listing the ways in which “the ripple effects of a complete ban on Huawei access to US tech will be huge.”

Gulp. Read more here.