US restrictions on Huawei Technologies have sparked a massive stockpiling of chips in the global semiconductor industry amid a shortfall in funding from Washington, an analyst told Reuters on Monday.
Washington pledged roughly $22.8bn in June to the US chipmaking industry but the funds may not be sufficient as they cover just half the required amount, Dan Hutchenson, chief executive for VLSI Research told the Reuters Global Markets Forum.
“Under the surface, there’s been lots of inventory build-up. We’re seeing integrated circuit inventory levels that are more typical in front of a downturn. [It] really lacks the funding levels needed ... $50 billion is more likely to have the desired result,” he said.
US semiconductor suppliers may face a spike in demand due to the restrictions on Chinese supplies, he said, adding that the industry could face further issues "if they get locked out of China's market, while the door remains open for other countries".
Huawei and ZTE were designated national security threats with alleged ties to the Chinese Communist Party and military, Federal Communications Commission (FCC) chief Ajit Pai announced in late June, without providing further details.
China's Chipmaking Industry To Build Self-Sufficiency, Challenge Trump Administration's Trade War
US president Donald Trump's efforts to curb Chinese tech firms such as Huawei come amid Beijing's State Council $1.4tn pledge to boost key mainland technologies in semiconductors, artificial intelligence, 5G and 6G, among others.
![A Kunpeng 920 chip is displayed during an unveiling ceremony in Shenzhen, China, Monday, Jan. 7, 2019 A Kunpeng 920 chip is displayed during an unveiling ceremony in Shenzhen, China, Monday, Jan. 7, 2019 - Sputnik International](https://cdn1.img.sputnikglobe.com/img/107137/16/1071371612_0:614:5000:2814_600x0_80_0_0_47fa5e8a61a1f65573270737d24b0b24.jpg)
Huawei may also launch plans to manufacture chipsets along with several firms in the mainland semiconductor industry to reduce dependence on US tech firms after Washington's restrictions blocked the Shenzhen-based firm's access to architecture for its flagship Kirin processors, reports in late August found.
Shanghai-based Semiconductor Manufacturing International Corporation (SMIC) has seen a surge in foreign and domestic investment after launching its initial public offering (IPO) after relocating from the New York Stock Exchange to the Shanghai Science and Technology Innovation (STAR) board, tripling shares for the mainland chipmaker from 27.46 yuan to 95 yuan.