Arm said to have suspended business with HUAWEI in potentially crushing blow (Updated)

Update #3: May 22, 2019 at 5:42 p.m. ET: An Arm spokesperson reached out to Android Authority to provide the company’s official statement on the matter:

Arm is complying with the latest restrictions set forth by the U.S. government and is having ongoing conversations with the appropriate US government agencies to ensure we remain compliant. Arm values its relationship with our longtime partner HiSilicon and we are hopeful for a swift resolution on this matter.

Update #2: May 22, 2019 at 09:05 a.m. ET: A HUAWEI spokesperson has released a statement in response to the recent Arm developments (via The Verge).

“We value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions,” said the spokesperson. “We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world.”

This echoes HUAWEI founder Ren Zhengfei’s comments on the situation earlier this week. Ren reportedly said he believes U.S. companies were working to persuade the U.S. government to co-operate with HUAWEI. HUAWEI is also said to be working with Google on a solution. It seems HUAWEI views the companies taking action against it as similar victims of the U.S. government’s political moves.

For more, read why we think losing Arm is a bigger deal than losing Google for HUAWEI.

Update #1: May 22, 2019 at 08:09 a.m. ET: In an emailed statement, an Arm spokesperson told Android Authority, “Arm is complying with all of the latest regulations set forth by the U.S. government.”

While this doesn’t explicitly confirm the existence of the Arm staff memo reported by the BBC, it now seems likely that Arm’s business deals with the Chinese firm are affected by the U.S. sanctions. To what extent, we don’t know, but the BBC indicated that essentially all Arm-HUAWEI transactions and discussions had been put on hold. More in the full story below.

Original coverage: May 22, 2019 at 06:09 a.m. ET: U.K. tech firm Arm has told its staff to halt business deals with Huawei, according to the BBC citing internal documents it has seen.

The chip maker has apparently told employees to pause “all active contracts, support entitlements, and any pending engagements,” with HUAWEI and its subsidiaries in compliance with the recent U.S. trade sanctions.

Arm’s staff were also told they were not permitted to “engage in technical discussions, or otherwise discuss technical matters with HUAWEI, HiSilicon or any of the other named entities.” Arm believes it is affected by the restrictions the U.S. government has placed on HUAWEI as its designs contain “U.S. origin technology.”

Though HUAWEI develops many of its own chips in-house, the company relies on Arm licenses for certain architectures and designs. These licenses are critical to the development of smartphone CPUs in GPUs — the vast majority of smartphone makers use Arm’s designs. Losing Arm’s support would severely impact HUAWEI’s ability to produce smartphones and other mobile products.

Last week, President Trump declared a national emergency over threats presented by foreign telecommunications equipment and manufacturers. At the same time, HUAWEI was put on the U.S. government’s “Entity List” — a list of companies which can’t conduct business in the U.S. with government approval.

The U.S. later gave HUAWEI a 90-day license allowing it to continue conducting core business operations; the move was intended to give U.S. companies time to prepare for a broader ban. However, an Arm source told the BBC its staff had been ordered not to start working with HUAWEI or its subsidiaries again, even during this 90-day period.

HUAWEI is accused of posing a security threat to Western nations due to its alleged ties with the Chinese government. HUAWEI has denied any wrongdoing.

Android Authority has reached out to Arm and HUAWEI for comment and will update this story should we receive a response.

Read next: HUAWEI Trump debacle: the story so far