Global IC Leader Arrow Electronics Could Face Restrictions Despite Denial

The US-China trade tensions have led to global IC leader Arrow Electronic's Arrow Asia PAC becoming the next likely candidate for blacklisting by the U.S. Bureau of Industry and Security (BIS) as a military-end-user (MEU), reported local media on Monday.

Over the weekend, Arrow has refuted the claim, saying the BIS has pledged to conduct investigations into the matter before publication on the Federal Register. The claim would mean that Arrow Asia PAC would need to gain American certification to supply Chinese contracts. The blacklisting of Arrow Asia PAC is the third example of American tightening restrictions on the semiconductor industry, following the U.S. ban on Huawei, HiSilicon, and Semiconductor Manufacturing International Corporation.

As Arrow handled dealerships for almost all global chip brands, the new restrictions could disrupt China's semiconductor chip supplying conditions and lead to Chinese clients looking for a second supplier. Industry watchers say the U.S. government's latest move on Arrow would significantly impact China, as it would directly cut off Chinese channels to obtain key chips.

Media reports are also indicating similar restrictions imposed on the world's fourth-largest IC testing and packaging firm STATS ChipPAC. Analysts say the biggest benefactor from the latest updates would be Taiwan's ASE Technology. The latest move would signal that the U.S. targets specific parts of the semiconductor supply chain and the entire upstream of IC designing, wafer production, and downstream elements like packaging and testing.