China warns about shunning Huawei
China has warned American technology companies Intel (INTC), Qualcomm (QCOM), and others of dire consequences if they respond aggressively to the trade restrictions that American authorities have slapped on Huawei, according to a report from the New York Times.
Last month, the Trump administration blacklisted Huawei as a national security risk, thereby prohibiting suppliers with operations in America from doing business with Huawei. As a result, several American companies, including Google (GOOGL) and Microsoft (MSFT) have suspended business deals with Huawei. Reuters also reported that Intel, Qualcomm, Broadcom (AVGO), and other semiconductor companies with a presence in the United States have stopped selling their chips to Huawei. Besides, some of these chip companies have sought to limit interactions between their employees and their Huawei counterparts.
Weak demand in China deals blow to Intel’s data center sales
China worries that American suppliers shunning Huawei could hamper the progress of one of its technology champions. For the likes of Intel, the trade dispute between the US and China threatens to slow their growth and throw their expansion ambitions into uncertainty.
China is an important market for Intel, the leading supplier of processor chips for data centers. China is home to some of the world’s fastest-growing cloud computing companies, which buy chips for their data centers from Intel. Intel’s data center business recorded a 6.0% year-over-year drop in revenue to $4.9 billion in the first quarter, a decline blamed on weak demand in China.