What happened: Chinese chipmaker HiSilicon said it has long been prepared for a situation in which its parent company Huawei could one day be unable to obtain chips and technologies from the United States. The company said it had been secretly developing substitutes to American products and now it is ready to put them to use to make sure Huawei continues its business. The US Commerce Department on Thursday officially added Huawei to a so-called Entity List that would ban the company from buying parts and components from American firms without US government approval.
Why it’s important: Though Huawei has its own chipmaking business, the impact of the Commerce Department’s trade blacklist on the company may still be severe. Of the $70 billion that Huawei spent on components and other supplies last year, $11 billion went to American companies, according to the company. HiSilicon may prove a critical asset for Huawei; analysts believe that its chip technology rivals that of market leaders such as Qualcomm. But it won’t offset the US threat entirely—the company still needs American components, IP, and tools to design new chips.