Sino-US friction has worsened in recent years as Washington tries to restrict China’s access to key technologies including cutting-edge chip technology, and Beijing looks to reduce its reliance on American tech.

The US Commerce Department said late Thursday it was working to obtain more information “on the character and composition” of the chip that may violate trade restrictions.

“The restrictions in place since 2019 have knocked Huawei down and forced it to reinvent itself – at a substantial cost to the (Chinese) government,” the department added. “We are continually working to assess and, when appropriate, update our controls based on the dynamic threat environment and we will not hesitate to take appropriate action to protect US national security.”

White House National Security Adviser Jake Sullivan told reporters on Air Force One the US government is trying to get more information about the Huawei chip.

“There’s a number of different methods to try to sort of come to an understanding of what exactly it is that we’re dealing with here,” Sullivan said. “I can’t give you an exact number of days but this is not going to be months down the road. We’re going to want to look at this carefully, consult with our partners, get a clearer sense of what we’re looking at, and then we’ll make decisions accordingly.”

The US sanctions cut Huawei’s access to chip-making tools essential for producing the most advanced handset models, hammering the company’s business and allowing Apple to take some market share from the national favourite in China.

Apple supplier Qualcomm, one of the US companies with the largest China presence, tumbled nearly 7 per cent to lead losses among major tech firms.

Lawmakers of both major US parties have been vocal in their concerns about national security risks allegedly created by China’s products, pressuring the Biden administration to get even more aggressive with Beijing.

“This is textbook Chinese Communist Party behaviour – promote PRC (People’s Republic of China) national champions in telecommunications, and slowly squeeze Western companies’ market access,” Gallagher, a Republican, told Reuters.

US Senator Mark Warner, a Democrat and the chair of the Senate Intelligence Committee, also shared similar concerns and said, “as the Chinese economy stalls, we can potentially anticipate more aggressive moves against foreign businesses”.

Other suppliers of the iPhone maker including Broadcom, Skyworks Solutions and Texas Instruments were also lower, falling between 1.8 per cent and 7.3 per cent. The drop in the technology sector weighed on the three main US stock indices, particularly the tech-heavy Nasdaq Composite, which lost 0.9 per cent in afternoon trading.

“This announcement seems to have just refocused investors that the relationship between the US and China is a big risk to current equity prices, particularly in technology,” said Rick Meckler, partner at Cherry Lane Investments.

IPHONE SLOWDOWN

Apple gets nearly a fifth of its revenue from the country.

“Already rivals are closing the gap in high-end smartphone sales, and if the situation were to escalate this could potentially allow competitors to have a greater chance of stealing Apple’s crown,” Streeter said.

Apple could, however, see a demand boost after an event next week where it is expected to unveil its iPhone 15 line-up, as well as new smartwatches.