Things only seem to be going from bad to worse for Huawei. After the ban from the U.S. government, the BBC reports that UK-based chip designer ARM has told its staff in an internal memo that it must suspend its business with Huawei. If true, it would be a significant blow to Huawei’s chip business as the company licenses the underlying architecture of its chip from ARM.

The move essentially puts the future of all upcoming chips from Huawei in jeopardy as without ARM’s support, Huawei won’t be able to do much.

ARM instructed its employees to kindly inform Huawei employees they come in contact with at business events that they cannot do any business with them due to political issues.

It advised staff to send a note informing Huawei (or related) employees that due to an “unfortunate situation”, they were not allowed to “provide support, delivery technology (whether software, code, or other updates), engage in technical discussions, or otherwise discuss technical matters with Huawei, HiSilicon or any of the other named entities”.

Huawei might have a plan B from a software perspective. With no Google Play or Google Services in China, Huawei can workaround this issue by releasing its own OS with Android app compatibility. Or it could partner with one of the third-party Android app stores. However, the company is unlikely to have a plan for chips.

Below is Huawei’s statement on the matter:

“We value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions,” says a Huawei spokesperson in a statement to The Verge. “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.

Our Take

While Huawei makes its chip in-house, they are based on the technology developed by ARM. For example, some of the CPU cores on the Kirin 980 chip are based on ARM’s Cortex-A76 core design. And this is just the CPU architecture. Huawei also licenses the instruction set from ARM which is even more important. Even Apple which designs its own CPU cores has to license the underlying instruction set from ARM.

Huawei engineers might be able to come up with their own CPU design, but they cannot come up with their own underlying instruction set. And even if they did, it won’t be compatible with Android which essentially renders the whole effort pointless. The thing is that apart from ARM, other companies in the component business have also decided against doing business with Huawei. While the company might have a stockpile of components for the next few months, its future plans are definitely going to be jeopardized by this.