Huawei ban clouds world’s growth outlook

Bloomberg

US restrictions on China’s telecom giant Huawei threatens to snuff out a nascent recovery in semiconductor demand, a key driver of economic growth in technology powerhouses including South Korea and Taiwan.
China dominates purchases from Asian semiconductor exporters and bought 51 percent of their exports in 2017, according to analysis by Citigroup Inc economists Jin-Wook Kim and Johanna Chua.
China and Hong Kong took 69 percent of South Korea’s chip shipments, 56 percent of Taiwan’s, 51 percent of Vietnam’s, 43 percent of Japan’s, and 39 percent of Malaysia’s exports, according to the Citi note. Citi’s Asia Semiconductor Leading Index “significantly stalled” in May having shown signs of
recovery since January and could worsen from here if trade tensions deepen.
“In our view, China’s restocking efforts for electronic goods will likely weaken and be delayed if the tensions and the ban stay longer, which likely will hurt overall demand,” they wrote.
Evidence of weaker demand was on display. South Korean exports during the first 20 days of the month fell 11.7 percent from a year earlier, pointing to a sixth-straight full-month drop, driven by tumbling prices of semiconductors and falling exports to China, the country’s biggest export market.
Semiconductor shipments, which account for about a fifth of South Korea’s exports, fell 33 percent, while total exports to China dropped 16 percent.
“As trade wars hurt demand in the US and China, Asian electronics manufacturers will feel considerable pain, in our view,” Tieying Ma, an economist at DBS Group Holdings Ltd, wrote in a note.
If China buys more South Korean chips instead of US ones, then it could offset some of the negative effects in Asia, Citi noted. The International Monetary Fund has estimated that the Asia Pacific region is the biggest driver of world economic growth.
“It seems that the trade war is increasingly showing signs of becoming a tech war,” Seema Shah, senior global investment strategist at Principal Global Investors, said in emailed remarks.

‘Huawei ‘has cut Apple into pieces’
Bloomberg

China has reacted with uncharacteristic fury to what it deems a concerted US attack on its national champions — and even its way of life. But one diplomat showed a touch of humor as he jumped to Huawei Technologies Co’s defense.
Zhao Lijian, deputy chief of mission at the Chinese embassy in Islamabad, tweeted a picture Tuesday of a carved-up apple. “It has been just revealed why @realDonaldTrump hated a private company from China so much,” he joked. “Look at the logo of Huawei. It has cut APPLE into pieces…” The escalating US-Chinese tensions over trade and Huawei threaten to pummel a swathe of technology companies from America to Asia, dampen global growth and hamstring the country’s largest tech firm.