Japanese companies are weighing the risks involved in continuing to work with China's Huawei Technologies, but few have proved willing at this point to shun such a large and growing customer, a Nikkei survey shows.
Of the roughly 50 major Japanese corporations polled, about 80% said they still do business with Huawei despite American restrictions on trade with the company. The actual figure could be higher, as this does not include companies that declined to respond on the status of their ties.
Companies that continue to sell to or buy from Huawei include Sony, Panasonic, TDK and Kioxia, formerly Toshiba Memory. None of the suppliers surveyed cut off all ties with Huawei in response to its U.S. blacklisting.
The mid-September poll, covering both suppliers and customers, came four months after the U.S. Commerce Department placed the Chinese company on its Entity List, in effect barring American companies from supplying it with sensitive technology.
U.S.-China trade talks this month could alter the calculus for Japanese companies, depending on whether the two sides can make headway toward easing tensions.
The stakes are high. Huawei sources about 700 billion yen ($6.48 billion) a year in components from Japanese suppliers. "Of course we want to sell them more if they ask us to," an executive at a components maker said.
Sony's sales of camera image sensors to Huawei account for an estimated 20% or so of the Japanese company's roughly 800 billion yen in annual sales in this segment, according to a securities analyst.
In principle, Washington's ban also applies to products from non-U.S. businesses that contain more than 25% American content, such as parts, software or technology. Sony concluded that its products do not run afoul of this rule.
Panasonic, which provides electronic components and parts for manufacturing equipment, and capacitor supplier Murata Manufacturing each reached similar conclusions about their own offerings. Motor maker Nidec and iPhone screen supplier Japan Display also still sell to Huawei.
Yet other businesses have quietly abandoned plans to start dealing with Huawei or rejected requests by the Chinese company for big orders.
A Japanese manufacturer of smartphone-related products that does not currently do business with Huawei had been negotiating a possible order. Even though the items in question were not subject to the U.S. ban, the parts maker still pulled out of the talks.
A source involved in the negotiations cited Huawei's reported connections to the Chinese military and the difficulty of ensuring that products would not be diverted to unintended uses. "We had to be careful," the insider said.
Another parts manufacturer was approached by Huawei about an order for a year's supply of components in anticipation of a protracted U.S.-China trade war. But the supplier refused, wary of potentially drawing Washington's ire.
Japanese companies that buy Huawei products were more likely than suppliers to change their approach. NTT Docomo will not offer Huawei smartphones for its fifth-generation wireless network, as the U.S. sanctions are likely to restrict the Chinese company's access to widely used Google apps. Docomo continues to procure 4G phones from Huawei, as do other Japanese carriers.
Should this trend spread more broadly worldwide, Huawei's Japanese suppliers could suffer lost business of their own.
China said in late May that it would create its own list of "unreliable entities," a move widely seen as retaliation for Huawei's blacklisting.