A looming trade war between the United States and China has put Qualcomm, one of America’s largest technology companies, squarely in the middle of the battlefield.
A major supplier in both China and the United States, the San Diego-based chip maker has long managed to play the trading relationship between the world’s two largest economies to its advantage. But an escalating trade battle over which country will dominate the technologies of the future is now threatening Qualcomm’s business and its growth.
On Monday, Qualcomm lost the ability to export semiconductors to one of its biggest customers after the United States banned Chinese telecom equipment maker ZTE Corporation from purchasing American technology for seven years.
In China, Qualcomm’s plan to acquire NXP Semiconductors, a critical part of its growth strategy, has been stalled by a prolonged antitrust review, a move critics see as Chinese retaliation for President Trump’s aggressive trade moves.
The White House, which has already threatened tariffs on more than $150 billion in Chinese goods, is preparing new restrictions on Chinese investments in the United States and could limit American partnerships with Chinese firms abroad.
Such a move could place further restraints on American companies with advanced technology, like Qualcomm, General Electric and Boeing, as they seek to form overseas partnerships. It would also likely incite more retaliation from the Chinese.
On Tuesday, the administration advanced a new rule that would limit the ability of Chinese telecommunications companies, including Huawei, one of Qualcomm’s competitors and a customer, to sell their products in America.
Qualcomm’s situation illustrates the perils of trying to punish a major trading partner that has become a crucial link in supply chains stretching across the globe. By targeting foreign players with ties to their own markets, the United States and China are putting their own economic futures at risk.
The question is whether the Trump administration will balk at paying that price — or see its goal of punishing China for unfair trade practices as more important than any collateral damage that could ensue.
“They’re obviously really caught in the middle,” Andrew Gilholm, the director of analysis for greater China at Control Risks, said of Qualcomm. “The demands the Chinese government has on them, and the demands coming from the U.S. side, at some point might become irreconcilable.”
