FILE PHOTO: Workers set up a Panasonic booth at the Las Vegas Convention Center in preparation for 2019 CES in Las Vegas, Nevada, U.S. January 6, 2019. REUTERS/Steve Marcus/File Photo

TOKYO (Reuters) - Japan’s Panasonic Corp said on Thursday it has stopped shipments of certain components to Huawei Technologies to comply with U.S. restrictions on the Chinese company.

“Panasonic has instructed employees to halt transactions with Huawei and its 68 affiliates covered by the U.S. ban,” the company said in a statement.

The Osaka-based company does not have a major production site for components in the United States, but it said the ban applies to goods having 25% or more of U.S.-originated technologies or materials.

The company, which makes a wide range of devices for smartphones, cars and factory automation equipment, declined to comment on which components are subject to the ban and where they are produced.

The U.S. Commerce Department blocked Huawei from buying U.S. goods last week, saying the firm was involved in activities contrary to national security.

The United States temporarily eased the restrictions on Huawei on Monday, to minimize disruption for customers. </s> Japan’s Panasonic said it was halting business with Huawei to comply with US restrictions.

Panasonic said the ban applies to goods having 25% or more of US-originated materials, according to reports.

However, there was some confusion about Panasonic’s position when, later in the day, its Chinese website said the firm would continue to supply Huawei.

Last week the US put Huawei on a list of companies that American firms cannot trade with unless they have a licence.

The restrictions mark an escalation in US efforts to block Huawei, which it says poses a security risk.

Trump declares emergency over IT threatsThe storm over HuaweiThe next US-China battleground

“Panasonic announced in [an] internal notification that it should suspend transactions with Huawei and its 68 affiliates that were banned by the US government,” the firm said in a statement provided to the BBC.

Later on Thursday, Panasonic appeared to contradict that position with a statement posted on its China website that said the Japanese company was continuing to supply Huawei.

Panasonic did not immediately respond to BBC requests for clarity.

It was also not clear what transactions Panasonic was suspending, or why they were subject to US restrictions. </s> Japan's Panasonic said Thursday it would stop supplying some components to Huawei, joining a growing list of firms distancing themselves from the Chinese telecoms giant after a US ban over security concerns.

Japan's Toshiba also announced it was temporarily halting shipments to Huawei to check whether US-made parts were involved, in order to comply with Washington's new restrictions.

The moves came a day after major Japanese and British mobile carriers said they would delay releasing new Huawei handsets, upping the pressure on the world's second-largest smartphone manufacturer.

In an official statement emailed to AFP, Panasonic said it had announced in an "internal notification" that it would "suspend transactions with Huawei and its 68 affiliates that were banned by the US government".

It declined to comment on "other transactions that are not banned by the US".

Asked about its opinion about the news, Huawei pointed to a statement on Panasonic's Chinese website that said the firm was supplying Huawei "normally" and doing so "strictly abiding by the relevant laws and regulations of countries and regions where Panasonic is present".

Washington's restrictions affect products made fully or partially in the United States, where Panasonic manufactures some of its components.

Toshiba meanwhile said it had temporarily halted shipments to Huawei while it checks if they include US-made parts.

"We will resume shipments if we confirm our products don't use American-made parts," spokesman Takashi Ebina told AFP.

Economic bullying'

Last week, Donald Trump declared a national emergency to bar US companies from using foreign telecoms equipment deemed a security risk.

The move appeared aimed at Huawei, though the White House said no particular company or country was targeted.

The Commerce Department has also announced an effective ban on US companies selling or transferring US technology to Huawei.

The moves have prompted a parade of firms to step back from dealings with Huawei, including Google, whose Android operating system powers most of the world's smartphones.

And on Wednesday, mobile carriers in Japan and Britain said they were delaying releases of Huawei handsets.

China's Foreign Minister Wang Yi denounced the US moves and said Beijing would "fight to the very end" in its trade war with Washington.

"The US use of state power to arbitrarily exert pressure on a private Chinese company like Huawei is typical economic bullying," Wang said Wednesday at a meeting in Kyrgyzstan.

Telecoms giant EE, owned by BT, had been due to bring Huawei's first 5G phone, the Huawei Mate 20X, to Britain, but chief executive Marc Allera said Wednesday the company had "paused" the launch.

The delay would last "until we get the information and confidence and the long-term security that our customers... are going to be supported", he said.

The group also said it would phase out the use of Huawei equipment in the most sensitive "core" elements of its network infrastructure.

Vodafone soon followed suit, announcing a temporary suspension of pre-orders for Huawei handsets.

And the BBC reported British firm ARM, which designs processors used in most mobile devices, would also cut ties with Huawei

Huawei said Wednesday that it recognised "the pressure" placed on its suppliers, and that it was "confident this regrettable situation can be resolved".

In Japan, KDDI and SoftBank Corp, the country's number-two and number-three carriers respectively, said they were delaying the release of Huawei handsets.

And the country's top carrier said it would suspend pre-orders for a new phone from the Chinese firm.

While Trump's order effectively bans US companies from selling Huawei and affiliates critical components, US officials offered a brief reprieve this week by delaying the ban for 90 days to avoid major disruption.

Analysts say the restrictions could be seriously damaging for the Chinese firm, with the pullback by Google and ARM likely to be "particularly troubling" for the telecoms giant.

"How the US ban on business with Huawei will impact the Chinese firm's performance is at this point unclear, but what is clear to me is that its sales will be negatively affected," said Hiroyuki Kubota, an independent financial analyst.

Washington has long suspected deep links between Huawei and the Chinese military, and its moves against the company come amid the churning trade dispute between the world's top two economies. </s> Panasonic said it was halting shipments of some components to Huawei that would fall under the proposed US export restrictions, in the latest setback for the Chinese telecoms equipment maker.

After an earlier statement sparked turmoil in China, the company released a second statement late on Thursday saying its business operations with Huawei that did not violate the US ban were “still ongoing”.

A person close to the company said few of its products would actually breach the US ban, adding that the firm had yet to halt any business transactions with Huawei.

The decision comes as companies across Japan’s tech sector, including SoftBank, Toshiba and Murata Manufacturing, are still scrambling to assess the impact of the US ban issued last week.

Still, investors in Huawei were given some clarity after Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, said on Thursday that it would continue to ship to HiSilicon, Huawei’s chip design affiliate.

The decision averts a worst-case scenario under which Huawei would have been unable to replace at least some semiconductors it can no longer buy from US suppliers with products developed in-house.

Many semiconductor companies in third countries are scrambling to determine whether their use of US-made equipment, software tools or patents will subject further sales to Huawei to a US export licence – which in many cases is likely to be denied.

Under Washington’s export control guidelines, third-country suppliers to blacklisted entities need to apply for licences if US content exceeds 25 per cent of the value of their products or services. According to industry executives, it remains unclear whether Washington intends to count US-made machinery as part of that calculation in the Huawei case.

In a statement earlier in the day, Panasonic, which makes car batteries, smartphone components and other devices, said it had sent an “internal notification that it should suspend transactions with Huawei and its 68 affiliates that were banned by the US government”.

The Chinese group declined to comment on Panasonic’s decision.

Other Japanese suppliers for Huawei include Sony, which makes image sensors, and Japan Display, which makes smartphone screens.

Shares in Panasonic fell as much as 1.4 per cent on Thursday. – Copyright The Financial Times Limited 2019 </s> Beijing on Friday accused the United States of spreading "lies" about Huawei after Secretary of State Mike Pompeo said the telecom giant was not being truthful about its ties to the Chinese government.

Huawei has been thrust at the centre of escalating tensions between the world's two top economies, with President Donald Trump saying Thursday the fate of the company could be included in any deal to resolve their trade war.

Chinese foreign ministry spokesman Lu Kang said he was not aware of the "specifics" of Trump's comments and repeated that dialogue must be based on "mutual respect".

The Trump administration has infuriated Beijing by blacklisting the smartphone and telecommunications company over worries that China uses it as a tool for espionage and allegations.

Huawei has repeatedly denied that it works with the Communist-led government.

"To say that they don't work with the Chinese government is a false statement," Pompeo told CNBC.

Lu said US politicians have spread rumours about Huawei without providing evidence.

"These American politicians continue to fabricate various subjective, presumptive lies in an attempt to mislead the American people, and now they are trying to incite ideological opposition," he said at a regular press briefing.

The heated rhetoric comes as trade negotiations have stalled, with neither side announcing a new date to resume talks after they exchanged increases in tariffs earlier this month.

But Trump said Thursday there was a "good" possibility that the two sides will strike a bargain.

"If we made a deal, I can imagine Huawei being included in some form or some part of a trade deal," he said, linking the company to the wider trade dispute.

Panasonic joins firms stepping away from Huawei after US ban

Japan's Panasonic said Thursday it would stop supplying some components to Huawei, joining a growing list of firms distancing themselves from the Chinese telecoms giant after a US ban over security concerns.

Japan's Toshiba also announced it was temporarily halting shipments to Huawei to check whether US-made parts were involved, in order to comply with Washington's new restrictions.

The moves came a day after major Japanese and British mobile carriers said they would delay releasing new Huawei handsets, upping the pressure on the world's second-largest smartphone manufacturer.

In an official statement emailed to AFP, Panasonic said it had announced in an "internal notification" that it would "suspend transactions with Huawei and its 68 affiliates that were banned by the US government".

It declined to comment on "other transactions that are not banned by the US".

Asked about its opinion about the news, Huawei pointed to a statement on Panasonic's Chinese website that said the firm was supplying Huawei "normally" and doing so "strictly abiding by the relevant laws and regulations of countries and regions where Panasonic is present".

Washington's restrictions affect products made fully or partially in the United States, where Panasonic manufactures some of its components.

Toshiba meanwhile said it had temporarily halted shipments to Huawei while it checks if they include US-made parts.

"We will resume shipments if we confirm our products don't use American-made parts," spokesman Takashi Ebina told AFP.

Last week, Donald Trump declared a national emergency to bar US companies from using foreign telecoms equipment deemed a security risk.

The move appeared aimed at Huawei, though the White House said no particular company or country was targeted.

The Commerce Department has also announced an effective ban on US companies selling or transferring US technology to Huawei.

The moves have prompted a parade of firms to step back from dealings with Huawei, including Google, whose Android operating system powers most of the world's smartphones.

And on Wednesday, mobile carriers in Japan and Britain said they were delaying releases of Huawei handsets.

China's Foreign Minister Wang Yi denounced the US moves and said Beijing would "fight to the very end" in its trade war with Washington.

"The US use of state power to arbitrarily exert pressure on a private Chinese company like Huawei is typical economic bullying," Wang said Wednesday at a meeting in Kyrgyzstan.

Telecoms giant EE, owned by BT, had been due to bring Huawei's first 5G phone, the Huawei Mate 20X, to Britain, but chief executive Marc Allera said Wednesday the company had "paused" the launch.

The delay would last "until we get the information and confidence and the long-term security that our customers... are going to be supported", he said.

The group also said it would phase out the use of Huawei equipment in the most sensitive "core" elements of its network infrastructure.

Vodafone soon followed suit, announcing a temporary suspension of pre-orders for Huawei handsets.

And the BBC reported British firm ARM, which designs processors used in most mobile devices, would also cut ties with Huawei.

Huawei said Wednesday that it recognised "the pressure" placed on its suppliers, and that it was "confident this regrettable situation can be resolved".

In Japan, KDDI and SoftBank Corp, the country's number-two and number-three carriers respectively, said they were delaying the release of Huawei handsets.

And the country's top carrier said it would suspend pre-orders for a new phone from the Chinese firm.

While Trump's order effectively bans US companies from selling Huawei and affiliates critical components, US officials offered a brief reprieve this week by delaying the ban for 90 days to avoid major disruption.

Analysts say the restrictions could be seriously damaging for the Chinese firm, with the pullback by Google and ARM likely to be "particularly troubling" for the telecoms giant.

"How the US ban on business with Huawei will impact the Chinese firm's performance is at this point unclear, but what is clear to me is that its sales will be negatively affected," said Hiroyuki Kubota, an independent financial analyst.

Washington has long suspected deep links between Huawei and the Chinese military, and its moves against the company come amid the churning trade dispute between the world's top two economies. </s> HONG KONG, May 29 (Reuters) - China’s Huawei Technologies Co Ltd has filed a motion for summary judgment in its lawsuit against the U.S. government, according to a court filing in the United States, in the telecoms equipment maker’s latest attempt to fight sanctions from Washington that threaten to push it out of global markets.

The world’s largest telecom network gear maker has since faced even greater sanctions as the U.S. commerce department on May 16 put the firm on a trade blacklist that bans companies from doing business with Huawei, in a move which immediately disrupted the global tech sector.

Huawei, which has been given a 90-day reprieve from the ban, has denied that its products pose a security threat and protested Washington’s attempts to limit its business. </s> The U.S. is no fan of Huawei.

Its officials have spent months warning that the Chinese giant's smartphones and networking gear could be Trojan horses for Chinese spies (something Huawei has denied). They have threatened to withhold intelligence from any ally that allows the firm in.

On May 15, they raised the stakes. President Donald Trump barred U.S. firms from using telecoms equipment made by firms posing a "risk to national security." His order named no names. But its target was plain.

For all the drama, the import ban hardly matters. Huawei has long been barred from the U.S., in practice if not on paper. More significant was the announcement by the Commerce Department, on the same day, that it was adding Huawei to a list of firms with which U.S. companies cannot do business without official permission. That amounts to a prohibition on exports of U.S. technology to Huawei.

It is a seismic decision. Supply chains are specialized and globally connected. Cutting them off — "weaponizing interdependence," in the jargon — can cause serious disruption.

When ZTE, another Chinese technology company, received the same treatment in 2018 for violating U.S. sanctions on Iran, it was brought to the brink of ruin. It survived only because Trump intervened, claiming it was a favor to Xi Jinping, China's president.

Huawei matters more than ZTE. It is China's biggest high tech company, and is seen as a national champion. Its name translates roughly as "Chinese achievement." Revenues of $105 billion put it in the same league as Microsoft. Only Samsung, a South Korean firm, sells more smartphones.

Huawei holds many crucial patents on superfast 5G mobile networks, and is the largest manufacturer of telecoms equipment. Were it to go under, the shock waves would rattle the entire tech world.

The impact of the ban is becoming clear. Google said it had stopped supplying the proprietary components of its Android mobile operating system to Huawei. A string of U.S. chipmakers, including Intel, Qualcomm and Micron, have also ceased sales.

On May 20, the Commerce Department softened slightly, saying that firms could continue to supply Huawei for 90 days, but for existing products — for instance, with software updates for Huawei phones already in use. New sales, on which Huawei's future revenue depends, remain banned.

But interdependence cuts both ways. Shares in U.S. technology firms fell after the announcement, because Huawei is a big customer. Qorvo, which employs 8,600 people and makes wireless communication chips, derives 15% of its revenue from Huawei. Micron is in the memory business, of which Huawei is a big consumer.

A report last week from the Information Technology & Innovation Foundation, a think tank, estimated that export controls could cost U.S. firms as much as $56 billion in lost sales over five years.

Unlike Intel, Qualcomm or ZTE, Huawei is privately owned. It lacks listed shares whose price swing would hint at the extent of its distress, though the price of its listed bonds has dropped to 94 cents on the dollar.

In public, the firm is staying calm. Ren Zhengfei, Huawei's founder, said it would be "fine" without access to U.S. technology. Huawei has spoken of activating a "Plan B." It has been stockpiling crucial components for months, and has made a push to become less reliant on U.S. technology over the past few years. Its phones in particular make extensive use of chips designed by HiSilicon, its in-house chipdesign unit.

Yet few analysts are as sanguine as Ren. Three business areas in particular look vulnerable. Without Google's cooperation, new Huawei phones will lack the latest versions of Android, and popular apps such as Gmail or Maps. That may not matter in China, where Google's apps are forbidden. But it could be crippling in Europe, Huawei's second-biggest market.

Its telecoms business needs beefy server chips from Intel. The supply of software to manage those networks could dry up too. Huawei is developing replacements for all three, but they are far from ready.

Two questions will determine whether Huawei can weather the storm, said Dieter Ernst, a chip expert at the East-West Center, a think tank in Honolulu. The first concerns U.S. motives. The timing of the ban, a few days after broader trade talks between China and the U.S. had broken down, was suggestive. On one reading, it is a tactical move designed to wring concessions from China. If so, it might prove short-lived, and Huawei's stockpiles may tide it over.

Paul Triolo of Eurasia Group, a political-risk consultancy, is doubtful. Rather than a negotiating tactic, he sees the ban as "the logical endgame of the U.S. campaign to take down Huawei." A long-lasting ban would force the firm to look for alternative chips and software that Chinese suppliers would struggle to provide.

The second question concerns the reach of U.S. power. The tangled nature of chip-industry supply chains means that many non-U. S. companies make use of American parts or intellectual property, Ernst said. They may therefore consider themselves covered, wholly or partly, by the ban. Take Arm, a Britain-based firm whose technology powers chips in virtually every phone. Arm dsof it will comply with the Commerce Department's rules. That suggests that Arm will not grant Huawei new licenses. It is unclear whether Arm will offer support for existing licenses, however. As Arm's technology advances, Huawei risks being left behind.

Other non-U. S. companies are as important. One industry insider said U.S. officials are pressing Taiwan Semiconductor Manufacturing Company (TSMC), a cutting-edge chipmaker, to drop Huawei, which is its third-biggest customer. That would be a crushing blow because Chinese chip factories are not up to the task of manufacturing HiSilicon's sophisticated designs. TSMC's only peer is Samsung — and South Korea is another U.S. ally. TSMC said it would continue supplying Huawei for now.

Even if the optimists are right, and the ban is lifted in exchange for trade concessions, a return to business as usual seems unlikely. The U.S. has twice demonstrated a willingness to throttle big Chinese companies. Trust in U.S. technology firms has been eroded, Triolo said.

China has committed billions of dollars to efforts to boost its domestic capabilities in chipmaking and technology. For its rulers, the U.S. bans highlight the urgency of that policy. </s> China will investigate whether FedEx Corp damaged the legal rights and interests of its clients, Xinhua news agency reported Saturday after Chinese telecom titan Huawei complained that parcels sent via the American global delivery service were diverted.

Huawei pointed out Friday that it was reviewing its relationship with FedEx, assuming it had diverted two parcels meant for Huawei addresses in Asia to the US and had tried to send back two others. FedEx responded by arguing that the packages were “misrouted in error”.

Amid an ongoing US-China trade spat, which has worsened since the US took action against Huawei, the Chinese commerce ministry said on Friday that it would compile a list of “unreliable” foreign firms and individuals that harm Chinese interests, while not specifying any names.

Separately, the world's second-largest economy voiced plans to increase tariffs on $60 billion in US goods, which are expected to come into force on Saturday, in retaliation to US President Trump's decision to punish China with levies on $200 billion worth of Chinese goods earlier this month.

Tensions have further worsened between the US and China recently after Washington barred Huawei equipment from its domestic market and tried to push its European allies to follow suit. The US attempted to justify its actions by claiming that Huawei was working in collaboration with the Chinese government and spying on users of Huawei devices at Beijing's behest, although both the company and the Chinese government vehemently denied the allegations on several occasions.

Huawei representatives addressed the claims, noting their codes are absolutely secure and they have never been given directives by the government, inviting independent checks into the matter.

READ MORE: Huawei Executive Says Company Preparing to Mitigate US Ban Effect on 5G Rollout

However, many US companies acted in line with the recent US blacklist. Google announced it would suspend offering Huawei devices updates to its software amid the suspension of other business ties to the company.

It was followed by other companies, including Panasonic and NTT Docomo of Japan. The development prompted the Chinese telecom giant to be pick up pace in making up for the loss of business partners by developing its own operating systems. It is reported to have applied for its own OS and other software trademarks in Europe, with the European Union Intellectual Property Office (EUIPO). </s> HONG KONG (Reuters) - China’s Huawei Technologies Co Ltd has filed a legal motion seeking to declare a U.S. defense law unconstitutional, in the telecom equipment maker’s latest bid to fight sanctions from Washington that threaten to push it out of global markets.

The motion for summary judgment in its lawsuit against the U.S. government, filed late on Tuesday in the U.S. District Court for the Eastern District of Texas, asks a judge to declare the 2019 National Defense Authorization Act (NDAA) unconstitutional. Huawei filed its lawsuit in March.

The NDAA bill, passed by the U.S. Congress last summer, places a broad ban on federal agencies and their contractors from using Huawei equipment on national security grounds, citing the company’s ties with the Chinese government.

Huawei, the world’s largest telecoms network gear maker, has repeatedly denied it is controlled by the Chinese government, military or intelligence services.

U.S. Secretary of State Mike Pompeo kept up the pressure on Huawei on Wednesday.

“Huawei is an instrument of the Chinese government,” Pompeo said in an interview with Fox Business Network. “They’re deeply connected. It’s something that’s hard for Americans to understand.”

Glen Nager, a partner at law firm Jones Day and lead counsel for Huawei, told Reuters the U.S. court had agreed on a schedule to hold hearings in September on motions by opposing sides.

Some legal experts said Huawei’s lawsuit was likely to be dismissed because U.S. courts are reluctant to second-guess national security determinations by other branches of government.

The lawsuit “will be an uphill battle because Congress has broad authority to protect us from perceived national security threats,” said Franklin Turner, a government contracts lawyer at McCarter & English.

In November 2018, a federal appeals court rejected a similar lawsuit filed by Russian cybersecurity firm Kaspersky Lab, which was challenging a ban on the use of the company’s software in U.S. government networks.

Earlier this month, the U.S. Commerce Department put Huawei on a trade blacklist that bans companies from doing business with the Chinese firm, a move which immediately disrupted the global tech sector.

Huawei’s chief legal officer, Song Liuping, on Wednesday said the company was reviewing ways to fight the U.S. ban, which he said was affecting its more than 1,200 suppliers and threatened to affect its 3 billion customers in 170 countries.

Song said Washington’s use of administrative orders and laws to punish a single company “sets a very dangerous precedent.”

“Today it is telecom and Huawei, tomorrow it could be your company, your industry, your customers,” he told reporters at Huawei’s headquarters in Shenzhen.

The ban, along with separate accusations of bank fraud and corporate theft that the United States has made against Huawei and its chief financial officer, has exacerbated the trade war between Beijing and Washington.

Huawei, which has been given a 90-day reprieve from the ban, has denied its products pose a security threat and protested Washington’s attempts to limit its business.

Vincent Pang, Huawei’s senior vice president and head of corporate communications, said the executive order and blacklist had transcended the boundaries of normal market competition.

“This could lead to the start of the fragmentation of the global tech ecosystem and standards,” Pang said on Wednesday at Huawei’s headquarters.

Pang also said he did not expect the “political” situation to delay the introduction in China of fifth-generation (5G) network technology.
Panasonic suspends shipments of certain hardware components to Huawei Technologies Co. Ltd. to comply with U.S. restrictions on the company.