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China reportedly summoned tech giants — and warned against cooperating with Trump's sales ban

Key Points
  • Chinese government officials summoned major technology companies this week to warn them that they will face consequences for complying with the Trump administration's policies, according to The New York Times.
  • The Trump administration is moving to ban sales of certain American technologies to Chinese companies.
  • U.S. companies could face permanent consequences for complying with the move, Chinese officials warned, while implying they should lobby against those policies.
The Huawei logo is seen on the side of the main building at the company's production campus on April 25, 2019 in Dongguan, near Shenzhen, China.
Kevin Frayer | Getty Images News | Getty Images

As the U.S. and China fight over trade, one key party is getting caught in the middle: Big technology companies.

The Chinese government reportedly summoned major technology companies this week, including notable semiconductor firms, according to a new report from The New York Times. The purpose was to warn them that they will face dire consequences if they comply with the Trump administration's efforts to ban sales of American technology to Chinese companies.

That comes after the Trump administration cut off the Chinese electronics company Huawei from sales of American technology. That ban, which happened last month, could interfere with China's long-term technology plans, the Times reported.

News that the U.S. was blacklisting Huawei triggered a big sell-off in chipmaker stocks last month. Huawei purchases about $20 billion of semiconductors each year, according to estimates from Evercore. Losing those sales would hurt U.S. chip suppliers.

But chip stocks rebounded after the Commerce Department gave mobile phone companies and internet broadband providers a 90-day license to work with Huawei. That move gave Google the chance to keep current Huawei devices running Android software up to date. The recovery for chip stocks will not last if a ban is made permanent, Wall Street analysts predicted.

This week's meetings were reportedly led by China's central economic planning agency and the National Development and Reform Commission. Representatives from China's Ministry of Commerce and Ministry of Industry and Information Technology also participated.

Both U.S. and non-U.S. companies that export goods to China were addressed by the officials.

U.S. companies were warned that they could face permanent consequences for cutting Chinese companies out of the global supply chain. Chinese officials also insinuated U.S. companies should lobby to change U.S. policies.

Non-U.S. companies were told they would face no consequences, as long as they continued to supply and conduct business normally with Chinese companies.

Read the full report in The New York Times

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