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China drafts law to allow Huawei to recover damages from TSMC due to submission to US sanctions
Since mid-September, the Taiwanese company TSMC has completely stopped the supply of semiconductor components for the needs of Huawei due to US sanctions. This was a serious blow to the business of the Chinese company, which has already tried on the status of the largest smartphone manufacturer. Chinese authorities are trying to pass a law that will allow companies from the PRC to recover damages from foreign partners in such cases.
Image source: Twitter
Beijing’s new legislative initiative reported by Asia Times. According to the source, the new order is planned to be ratified by the newly appointed Minister of Commerce of China Wang Wentao. The essence of the innovation is that Chinese companies will have a legal way to influence foreign companies that have damaged them as a result of restrictions imposed by third countries. The situation is best illustrated by the history of the US sanctions against Huawei. TSMC has stopped supplying the Chinese customer with HiSilicon processors, although it itself is subject to the jurisdiction of Taiwan, not the United States.
The new by-law will allow Chinese companies to recover damages from foreign partners, as well as force them to resume cooperation. Liberal critics have already reproached the Chinese authorities for trying to apply the reciprocal principle of the “long arm” in the area of law, which is abused by the United States, but representatives of the relevant Chinese department objected that the law would affect individual companies, not entire countries.
You shouldn’t think that TSMC is invulnerable to Chinese laws in this sense. First, the company receives approximately 22% of all revenue from Chinese customers. Secondly, it has enterprises on the territory of the PRC and until now planned to expand them. When developing business in China, foreign companies will now have to assess the risks of “collateral damage” in the trade confrontation between this country and the United States.