UK-based chip
designer ARM has told staff it must suspend business with Huawei,
according to internal documents obtained by the BBC.
ARM instructed employees to halt "all active contracts, support
entitlements, and any pending engagements” with Huawei and its
subsidiaries to comply with a recent US trade clampdown.
ARM's designs form the basis of most mobile device processors
worldwide.
In a company memo, it said its designs contained “US origin
technology”.
As a consequence, it believes it is affected by the Trump
administration's ban.
One analyst described the move, if it became long-term, as an
“insurmountable” blow to Huawei’s business.
He said it would greatly affect the firm's ability to develop its
own chips, many of which are currently built with ARM’s underlying
technology, for which it pays a licence.
Cambridge-headquartered ARM had been described as the UK's
largest tech firm until its takeover by a Japanese fund. It employs
6,000 workers and
lists eight offices in the US.
In a statement it said it was "complying with all of the latest
regulations set forth by the US government”, but declined to
comment further.
A spokesman for Huawei said the company “is not commenting at
this time”.
What is
ARM?
ARM is a chip designer founded in 1990. In September 2016 it was
acquired by Japanese telecoms giant Softbank, but remains based in
Cambridge, UK.
ARM does not manufacture computer processors itself, but rather
licenses its semiconductor technologies to others.
In some cases, manufacturers only license ARM's architecture, or
"instruction sets", which determine how processors handle commands.
This option gives chip-makers greater freedom to customise their
own designs.
In other cases, manufacturers license ARM's processor core
designs - which describes how the chips' transistors should be
arranged. These blueprints still need to be combined with other
elements - such as memory and radios - to create what is referred
to as a system-on-chip.
As a result, when you hear talk of a device being powered by a
Samsung Exynos, Qualcomm Snapdragon or Apple A11 chip - or one in a
Huawei smartphone - it is still ARM's technology that is
involved.
ARM's US headquarters are in San Jose, California, and the firm
has offices in Washington, Arizona, Texas and Massachusetts.
‘Unfortunate
situation’
ARM’s staff were informed of the decision on 16 May, following
the US Commerce Department’s move to add Huawei to its “entity
list” of companies with which American firms could no longer do
business.
The BBC has also seen a company memo dated 18 May detailing the
implications of the export ban.
On Tuesday 21 May, US government officials issued a 90-day
reprieve on the restrictions in order to minimise immediate
disruption. But a source at ARM said staff had not been told they
could start working again with Huawei or its subsidiaries, even
temporarily.
A spokesman for ARM declined to offer any additional clarity
about the current status of its Huawei contracts.
According to one memo, ARM staff were instructed to suspend all
interactions with Huawei and its subsidiaries.
It advised staff to send a note informing Huawei (or related)
employees that due to an “unfortunate situation”, they were not
allowed to “provide support, delivery technology (whether software,
code, or other updates), engage in technical discussions, or
otherwise discuss technical matters with Huawei, HiSilicon or any
of the other named entities”.
ARM staff that come into contact with employees at industry
events must “politely decline and stop” any conversations about the
business, the guidance said - stressing that individuals could be
held personally liable for breaking the trade rules.
The ban also appeared to apply to ARM China, the China-based
company in which ARM Holdings owns a 49% stake. It was set up as a
joint venture with a Chinese investment consortium last year in
order to enable ARM to develop, sell and offer support for its
products in the region.
'Insurmountable
obstacle'
Huawei told reporters on Tuesday that its “plan B” for software
would be to develop its own operating system, something it has
already been working on for some time. However, it will be
significantly more difficult for the firm to source home-grown
components of sufficient quality.
Huawei currently sources some of its chips from HiSilicon, which
it owns. However, while produced in China, HiSilicon’s chips are
built using underlying technology created by ARM.
While HiSilicon and Huawei are free to carry on using and
manufacturing existing chips, the ban would mean the company could
no longer turn to ARM for assistance in developing components for
devices in future.
HiSilicon's upcoming processor, Kirin 985, is due be used in
Huawei devices later this year. According to a source at ARM, it is
not expected to be affected by the ban. However, the next iteration
of the chip has not yet been completed - and is likely to need to
be rebuilt from scratch, the source said.
The relationship between ARM and Huawei engineers is tight -
earlier this month Huawei announced its intention to build a
research centre only 15 minutes from ARM’s headquarters in
Cambridge, UK.
"ARM is the foundation of Huawei’s smartphone chip designs, so
this is an insurmountable obstacle for Huawei,” said Geoff Blaber,
from CCS Insight.
"That said, with an abundance of companies in Huawei’s supply
chain already having taken action to comply with the US order,
Huawei’s ability to operate was already severely affected.”
What is not yet clear is whether ARM is acting on its own
interpretation of the US rules, or whether it has been advised by
the Commerce Department.
"If that interpretation is correct, that’s going to affect every
semiconductor company in the world,” remarked analyst Lee Ratliff,
from IHS Markit.
"They’re not going to be able to easily replace these parts with
new, in-house designs - the semiconductor industry in China is
nascent.”
Update #1, May 22, 2019, 08:09 a.m. ET: In an emailed statement, an Arm spokesperson told Android Authority, “Arm is complying with all of the latest regulations set forth by the U.S. government.”
不太妙。
