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Sanan Optoelectronics Solves Difficulties, Huawei "Loosens the Binding" and the Sino-US Pattern is Turning

Time:2018-01-08 Views:1591

The U.S. Department of Commerce announced on June 26 that eight Chinese enterprises, including Xiamen Sanan Optoelectronic Co., Ltd., will be removed from the Unverified List (UVL), which covers LCD parts, optical parts, radar equipment and other fields. In April this year, the U.S. Department of Commerce announced that 44 Chinese enterprises and schools would be included in the "Unverified" Entities‘Risk List (UVL), which should be treated with caution by American enterprises. Sanan Optoelectronics is one of them. According to relevant U.S. decrees, U.S. exporters need additional licensing procedures and meet higher requirements when dealing with these companies listed in the UVL. The procedures are more complex, which will make them unwilling to continue to cooperate, and it is very likely to suspend or cancel the original trading plan. Sure enough, just a few days after the announcement, American Applied Materials Corporation announced that it would stop supplying Sanan Optoelectronics.

However, on April 22, the media learned from San‘an Photoelectric that after effective communication between the two sides, American Applied Materials Corporation (AMT) resumed its supply and cooperation with San‘an Photoelectric Company. The removal of the UVL list also means that the transactions between US companies and eight other companies, such as Sanan Optoelectronics, are no longer subject to US export controls.

In just over two months, San‘an Optoelectronic Company "turned the crisis into a safe one". Behind this, it reflects that the United States has not achieved the desired results in its offensive. After the supply of applied materials was cut off, Sanan Optoelectronics once said that the company was providing LED coating materials for Sanan Optoelectronics. So far, Sanan Optoelectronics has many suppliers to supply. Applied materials are only the alternative suppliers of Sanan Optoelectronics. Even without the supply of applied materials, Sanan Optoelectronics can produce 100% without any influence.

As Sanan Optoelectronics said, as the world‘s largest supplier of LED chips, the U.S. government has little influence on its restrictions. But on the contrary, 26% of the revenue of Applied Materials comes from the Chinese market, which has a greater impact.

It is noteworthy that after the removal of Sanan Optoelectronics from the danger list, the United States began to relax on other aspects. On June 29, the United States agreed not to impose new tariffs at the meeting between the heads of China and the United States dollar. At a press conference after the closing of the G20 summit, it said that American companies could continue to cooperate with Huawei.

On March 23, 2018, U.S. President Trump announced that he would impose tariffs on $60 billion of imports from China and restrict Chinese enterprises from investing and acquiring in the United States. Since then, about $300 billion of goods have been subject to an additional 25% tariff.

On May 15 this year, the Department of Commerce‘s Industrial and Safety Bureau announced that Huawei would be included in the "Entity List". Enterprises or individuals on the list need to obtain permission to purchase or transfer U.S. technology. This means that U.S. suppliers may no longer supply chips to Huawei.

Like the San‘an Photoelectric Event, the United States, which thought it could do well, was not as good as a fish in water in both respects.

In terms of tariffs, taking the LED industry as an example, most enterprises say that they do have an impact, but they can still cope with it. According to Lyad, a display company, the proportion of revenue that the company exports to the United States accounts for less than 7% of total revenue, with little impact. Moreover, the company‘s Slovak factories have started production and will expand production according to demand in the future. Lehman Electronics said that Sino-US trade frictions have a certain impact on the company‘s export business, but the supply side is not affected, because the company relies very little on foreign raw materials; Zhaochi shares even said that tariffs are imposed on the company. The company‘s revenue and daily operations have no impact.

At the same time, China began to impose 10-25% tariffs on American food, automobiles, medical equipment and other products. Some American economists say that tariff measures in the United States will lead to greater cost pressures on American businesses, and then pass some of the costs on to American consumers through price increases. In addition, domestic export enterprises are hindered in export, which may shift their focus to the domestic market and intensify domestic competition.

To restrict Huawei, some people in the semiconductor industry chain say that Huawei has stockpiled its core components for half a year or so. Since 2018, Huawei has been prepared to prepare its inventory in advance to meet this year‘s challenges, and Heiss‘s "spare tire strategy" can also withstand some risks for the company. In addition, Huawei has also said that the U.S. companies it works with will cause huge economic losses and affect tens of thousands of jobs in the United States.

Interestingly, the blockade of the United States has increased Huawei‘s global brand effect. Huawei‘s three products ranked among the best-selling models of China‘s mobile phones of RMB 3000-3999 released by the First Mobile Industry Research Institute in May, and the rankings of two of them rose by one and three respectively. During MWC19 in Shanghai, He Gang, president of Huawei‘s mobile phone business, also said in his speech at the Global Terminal Summit: As of June 20, 2019, Huawei‘s P30 series mobile phones had sold more than 10 million units in 85 days, 62 days ahead of the time when the P20 series mobile phones had reached 10 million units.

It can be seen that under China‘s resistance and counter-attack, the American ambition has not only temporarily stalled, but also affected its own interests. As President Xi Jinping said, "If we combine our interests, we will both get hurt in fighting." If the United States really wants to relax, it will not only mean that Chinese companies will ease the pressure, but also benefit the United States. A new turn has taken place in the overall pattern. When blindly attacking has not received obvious results, considering win-win is the effective way to obtain the greatest benefits.