Intel temporarily suspends supplies of chips to Inspur
Published: Jul 01, 2020 09:38 PM

An Inspur server. File Photo: VCG

Intel, which has halted shipments to Chinese server major Inspur, will resume supplies at a later date, the largest US chipmaker confirmed with the Global Times on Wednesday. The suspension, albeit short-lived, could spill over to affect other companies, and similar moves are likely, shrouded in the shadow of US arbitrary unilateralism, according to an industry veteran. 

East China's Shandong Province-based Inspur, the world's third-largest server manufacturer and China's largest, was lately revealed to be on a US list of 20 firms that are allegedly owned and controlled by the Chinese military. The list also includes technology behemoths Huawei and Hikvision. 

Media reports of Intel's supply suspension hammered shares of Shenzhen-listed Inspur Information early in the afternoon trading session. 

Inspur's shares closed down 4.75 percent on Wednesday, underperforming the market at large.

The flagship Shanghai Composite Index gained 1.38 percent to finish above 3,000 points on Wednesday for the first time since March 11, when the market was roiled by the evolution of the coronavirus outbreak into a pandemic. 

The Shenzhen Component Index was up 1.01 percent on Wednesday.

"Intel has temporarily paused shipments to this one customer in order to make a few changes to our supply chain as required by US law," said a company statement sent to the Global Times. 

This temporary pause is expected to be less than two weeks, during which time Intel will resume shipments, the company disclosed. 

Inspur had not replied to a request for comment by press time. 

The short-lived suspension is unlikely to cause any substantial damage to either company, said Liu Dingding, a Beijing-based independent industry analyst, citing existing orders and stockpiles.

Other Chinese companies on the US-compiled list have yet to report similar instances of supply chain suspension. 

But Liu told the Global Times on Wednesday that it's likely that more businesses would be subject to a supply hiatus, as they rely on US-based companies such as Intel for core equipment for the production of servers, among other tech items and solutions. 

Such suspensions build on the extreme actions that the US has taken since it kicked off a trade row with China in 2018 - the likes of export restrictions and an expanding entity list that targets Chinese businesses - which essentially go against the will of businesses across the Pacific, he commented.

He said the US moves amounted to a wake-up call for China to focus more on its indigenous push for core technology in central processing units, graphics processing units and operating systems.

Huawei has taken the lead in the homegrown push for backup chips and operating systems, with its alternatives to US equivalents gaining increasing clout, analysts said.

A notable example is the speedy listing approval process of Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) on the NASDAQ-style STAR Market in Shanghai. 

Online subscriptions for SMIC's shares will open on July 7, paving the way for possibly the biggest listing on the STAR Market this year. SMIC, which withdrew its listing from the US market a year ago, is currently traded in the Hong Kong market.