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Trump's tech clampdown may damage Huawei's new telephones

Huawei, the competitive Chinese tech giant, has some chic new phones. You have the job: fast processor, shiny user interface, high-performance cameras.

The problem? Stock may be limited.

With all the usual pomp and showmanship, Huawei on Thursday launched the Mate 40 series, the company's first new top-of-the-line smartphone to hit the market since the Trump administration severely restricted the ability to buy computer chips anywhere in of the world.

However, the company didn't say whether these restrictions would prevent buying enough chips or other components to keep the latest phones updated. Smartphones contain a variety of parts from different providers. If just one of them runs out, Huawei could be forced to stop deliveries.

Richard Yu, head of Huawei's consumer business, made brief reference to the company's troubles on Thursday.

"We are at a very difficult time," he said. On a screen behind him was a picture of a rainbow with the words, "We are determined to innovate for all of humanity, rain or shine."

The Trump administration has acted steadfastly in its campaign against Huawei, whose equipment powers telecommunications networks around the world. With such a blurred line between large corporations and the state in China, according to American authorities, one cannot trust Huawei to play such a large role in the global information infrastructure. The company has vigorously denied allegations of endangering a country's security.

As the US put restrictions in place after restrictions on Huawei's business, the company has learned how to bobble and weave to survive. Last year, after the commercial department restricted Huawei's ability to work with American technology suppliers, the company began using self-developed parts in its products.

Huawei's chip division, HiSilicon, is able to develop advanced computer chips. But it still depends on outside manufacturers to produce them. For this reason, the trading division dealt a severe blow to Huawei this year by restricting its collaboration with semiconductor manufacturers such as Taiwan Semiconductor Manufacturing Company, the world's largest chip maker for rental.

American companies' software and equipment are critical to chip manufacturing, which allows the US government to influence the operations of overseas manufacturers like TSMC. Before that year, Huawei was one of the Taiwanese giant's largest customers. The two companies worked together to make Huawei's Kirin smartphone chips.

The Commerce Department's announcement of the latest restrictions in May resulted in Huawei getting on inventory of chips and other components before the rules went into effect in September. The numerous purchases pushed Taiwan's exports to a record high in August. The managing director of TSMC, C.C. Wei confirmed during a conference call with analysts last week that the shipment will no longer be sent to Huawei.

Mr. Yu said the main chip in the Mate 40 has "5 nanometer" technology and refers to an advanced semiconductor manufacturing process that only TSMC and Samsung can use on a commercial scale. The chips in Apple's latest iPhones are also manufactured using the 5-nanometer process.

Last year's US restrictions also prevent Huawei from charging its phones using the Google Play Store and other Google apps like Gmail and Google Maps. These services are already blocked in China. But their absence is a big problem in other markets.

Ben Stanton, an analyst at research firm Canalys, said retailers and wireless operators outside of China tried not to stock too many Huawei devices over the past year. "They are extremely nervous about whether Huawei will even be in the smartphone game in two or three years," he said.

With people changing their phones less often than they used to, Huawei cannot afford to look at risk, even if survival is currently the company's top priority, as executives have admitted.

"Huawei needs to project this image that it is a strong, stable company no matter what is going on behind the scenes," said Stanton.

People in China still support the company, many out of patriotic pride. According to Canalys, buoyant Chinese sales helped Huawei dethrone Samsung as the world's largest smartphone seller in the second quarter.

Cell phones aren't the only Huawei business that's under pressure. Sweden this week banned cellular operators from using devices from Huawei and another Chinese operator, ZTE, on their upcoming 5G networks. Britain did the same in July.

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