Meng Wanzhou's Canadian incident was the beginning of Huawei's sanctions. Since then, the US government has been willing to "kill one thousand enemies and hurt 800 themselves" and has continued to escalate the sanctions, causing global turmoil in the technology industry. Can this

Meng Wanzhou Canada incident was the beginning of Huawei's sanctions. Since then, the US government has been willing to "kill one thousand enemies and hurt 800 themselves" and has continued to upgrade the sanctions, causing global turmoil in the technology industry. Can this "Huawei robbery" still have a non-lose solution

pic/Visual China

text | Xie Lirong Jin Yan Chen Xiaoxiao Li Yinfeng

edit | Mark

Huawei Chief Financial Officer Meng Wanzhou lost the first opportunity to regain freedom.

At 9 a.m. on May 27, Canada, Deputy Chief Justice of the Supreme Court of British Columbia, Canada, Heather Holmes, notified Meng Wanzhou's defense lawyer team and Canadian government lawyers: Meng Wanzhou's "double crime" was established and rejected Meng Wanzhou's request to terminate the extradition.

Meng Wanzhou's side will definitely appeal and the extradition case will continue. After the ruling of

came out, a lighthouse picture before dawn was circulated again on Chinese social media at 3 a.m. At the beginning of the Meng Wanzhou incident in Canada, Huawei produced this picture to boost morale. If the scarred picture of the plane that Ren Zhengfei mentioned frequently before represents hardship, this picture once represented hope.

At this point, Meng Wanzhou has been under surveillance in Canada for 532 days. On December 1, 2018, Meng Wanzhou was detained after taking off a flight from Cathay Pacific to Vancouver, Canada. Later that day, she originally planned to board an intermodal flight to Mexico. Ten days later, Meng Wanzhou was asked to monitor her living in Canada, wearing electronic monitoring foot rings on her feet, and her range of movement was limited. Most of the time, her life was dull. In early 2019, Ren Zhengfei mentioned Meng Wanzhou in an interview with foreign media. He said that this incident actually improved the relationship between father and daughter. "Now she understands how difficult life may be."

But Judge Holmes's ruling does not mean that things are over.

Meng Wanzhou's extradition case will enter the next stage. At the hearing held in June, the focus of the prosecution and defense will focus on "whether Canadian officials' arrest of Meng Wanzhou complies with the law enforcement procedures."

Refer to the extradition flowchart provided by the official website of the Canadian Ministry of Justice. At present, the first phase has been completed, and now is the end of the second phase of the judge's ruling.

Since the result of this ruling is not good for Meng Wanzhou, Meng Wanzhou can appeal to the Supreme Court of Canada to apply for a final ruling and simultaneously apply for compliance review of judicial procedures.

If there is no appeal (there is almost no possibility), the extradition case will enter the third phase and be transferred to the Canadian Attorney General for review and approval. After approval by the Canadian Attorney General, the extradition transfer process is initiated. In other words, Meng Wanzhou lost only the first opportunity, and the game continued.

Source:

Canadian Ministry of Justice, drawing: Li Li

3 days ago, the domestic country was more optimistic about the result of this ruling. People are willing to believe that Meng Wanzhou will soon be able to return to China once Heather Holmes declares a "double crime" invalid.

This expectation is too optimistic. Both parties can appeal and apply for judicial review of the judge's ruling. Assuming that it is another outcome, Canadian government lawyers representing the U.S. judiciary can also appeal to overturn existing rulings. If a Canadian government lawyer appeals, he may also apply to the court to restrict Meng Wanzhou's departure. In other words, Meng Wanzhou can indeed be released in court, but cannot leave Canada. After the results of

came out, Huawei headquarters issued a statement saying, "I expressed disappointment with the British Columbia High Court's verdict. We have always believed that Ms. Meng is innocent and will continue to support Ms. Meng's search for fair judgments and freedoms. We hope that Canada's judicial system can ultimately restore Ms. Meng's innocence. Ms. Meng's lawyer team will work tirelessly to ensure justice is upheld."

As of press time, the Chinese Ministry of Foreign Affairs has not responded to this. At the regular press conference on May 26, Foreign Ministry spokesman Zhao Lijian said: "China's position on the Meng Wanzhou incident is consistent and clear.The United States and Canada abused their bilateral extradition treaties and took compulsory measures against Chinese citizens arbitrarily, seriously infringing on the legitimate rights and interests of Chinese citizens. This is a serious political incident. The Chinese government is unswerving in safeguarding the legitimate rights and interests of Chinese citizens. The Canadian side should effectively correct its mistakes, release Ms. Meng Wanzhou immediately, and ensure that she returns to China safely, so as not to continue to damage China-Canada relations. "

Meng Wanzhou incident was the beginning of the US government's sanctions on Huawei. Since then, Huawei has been included in the embargo list by the US government, and its scope of control has been continuously expanded, and its efforts have continued to escalate. The incident is still developing in a more severe direction. During this period, turmoil in the global technology industry chain has emerged, and it is still unknown whether the US technology industry can survive alone.

combined with the negative impact of the new crown epidemic on the global economy, the academic industry has been blocked from economic globalization and global technology The atmosphere of concern about industrial decoupling is becoming increasingly strong, and everything is moving in a direction that looks bad. Every party in the incident cannot avoid pressure.

The key "double crime"

This ruling is the most important ruling, but it is far from the final ruling. The pressure is currently shifting to Meng Wanzhou's legal team

In the ruling statement issued by the Supreme Court of British Columbia, Heather Holmes detailed the basis for the allegations, saying that these were the key content that prompted her to commit a "double crime". A reporter from "Finance" sorted out some of the important information.

. Two Reuters reports in December 2012 and January 2013 revealed that Skycom is selling computer equipment made in the United States to Iran. The report also pointed out that Huawei and Skycom have a very close ties, and mentioned that Meng Wanzhou served as the director of Skycom from February 2008 to April 2009. Members of the meeting.

Second, HSBC asked Huawei for relevant information after learning about Reuters’ reports, and Huawei’s representatives denied it. In August 2013, Meng Wanzhou said that Huawei strictly abides by the US trade sanctions on Iran, and Huawei and Skycom are just ordinary trade partnerships. Although Huawei was a shareholder of Skycom before, she was a member of Skycom’s board of directors, but the shares have been sold and she has also withdrawn from Skycom’s board of directors. Huawei Business deals with Iran are carried out through local branches. Huawei's branch in Iran have no business deals with HSBC. After the meeting, Meng Wanzhou also sent the English version of Powerpoint file used to introduce relevant content to the senior management of HSBC.

Third, HSBC Global Risk Committee held a meeting in London on March 31, 2014 to discuss "reputation and regulatory issues" related to Huawei, and finally decided to retain Huawei's business. When making this decision, the main basis of the committee was Meng Wanzhou Assurances provided during the meeting in August 2013. One month after the committee made its decision, HSBC provided Huawei with a proposed $900 million credit arrangement. About a year later, HSBC, along with other international banks, provided Huawei with $1.5 billion in syndicated loans.

its fourth, although Huawei sold all its shares in Skycom before August 2013 and Meng Wanzhou also withdrew from the Skycom board, in fact, Huawei still continues to control Skycom and its banking and business operations in Iran. Skycom employees have Huawei email addresses and industrial signs, and are using stationery with Huawei logo. Skycom's directors and their bank account signatories are Huawei employees. The company that purchased Skycom shares sold by Huawei was established through Huawei financing, and its banking and business operations were under Huawei's control.

Fifth, Huawei’s real relationship with Skycom is crucial to HSBC’s decision whether to continue to retain Huawei as its customer. Meng Wanzhou's false statements at the Hong Kong meeting in August 2013 misrepresented the actual relationship, putting HSBC at risk of fines and serious penalties for violating the Delayed Prosecution Agreement (DPA) and the U.S. trade ban. These misrepresentations also put HSBC at economic and reputational risks.

These allegations come from U.S. prosecutors.Heather Holmes stressed that whether the above allegations are true has not been finalized by the Canadian court, but in order to assess whether the double crime requirement is met, the court will examine whether the act itself is illegal.

Based on the above allegations of conduct, the US Department of Justice believes that Meng Wanzhou is deliberately defrauding financial institutions and putting him at the dual risks of huge financial losses and reputation losses.

Meng Wanzhou's defense team believes that all the allegations are based on the US trade sanctions against Iran. Without the US trade sanctions against Iran, there would be no subsequent risk of all fraud and financial and credibility losses. Canada withdrew from trade sanctions against Iran three years ago, so the premise of fraud charges does not exist in Canada, and similar behaviors will not be accused of crimes in Canada.

Heather Holmes believes that the so-called illegal act is essentially the intentional creation of false statements in bank customer relationships, putting HSBC in danger. While U.S. sanctions are part of driving the entire incident and are a necessary condition to explain how HSBC faces risks, sanctions themselves are not an inherent part of illegal acts.

In view of this reason, Heather Holmes disagrees with Meng Wanzhou's defense team that US sanctions are the prerequisite for forming HSBC's risks.

She believes that fraud is an act with great potential boundaries and a wide range of circumstances, and the act of identifying the crime of fraud should not be completely applied to a fixed standard. Recognizing Meng Wanzhou's defense team's approach to analyzing double crimes will seriously limit Canada's ability to fulfill international obligations in the context of extradition fraud and other economic crimes.

In this ruling of more than 20 pages, Heather Holmes emphasized that although Canada has not imposed sanctions on Iran, this does not affect Meng Wanzhou's prosecution in Canada on the same charge. That is, "double crime".

The so-called double crime refers to the acts that Meng Wanzhou was accused of in Canada and the United States, the extradition applicant, can be considered a criminal act. This is a necessary condition for the approval of extradition cases in Canada – allegations against suspects should constitute a crime in both Canada and in countries seeking extradition.

According to the Canadian legal system, a double crime is established as long as the extraditioner's behavior is also considered a crime in Canada. It doesn't matter which crime is charged, and the specific elements of the crime do not have to match foreign crimes; if the extraditioner faces charges of multiple crimes, as long as one of the crimes should be punished in Canada, a double crime can be considered valid.

Meng Wanzhou's extradition case has undergone many rulings before this. These rulings are based on procedures such as bail application, extradition hearing process, evidence submission and testimony. This ruling is the first core ruling made by the Canadian judicial department after fully collecting information, listening to the statements and defenses of the alleged charges, and checking the relevant evidence.

Heather Holmes ruled that the "double crime" of Meng Wanzhou's extradition case was established, and the pressure was transferred to Meng Wanzhou's team. Although this ruling is important, it is far from the final ruling.

Referring to the extradition flowchart provided by the official website of the Canadian Ministry of Justice, we can find that the first phase has been completed, and now is the second phase, the Judicial stage.

At this time, Meng Wanzhou can appeal to the Supreme Court of Canada to apply for a final ruling and apply for compliance review of judicial procedures simultaneously.

If there is no appeal (there is almost no possibility), the extradition case will enter the third stage and be transferred to the Canadian Attorney General for review and approval. Only after approval can the extradition transfer process be initiated.

Douglas Paal, an outstanding distinguished researcher at the Asian project of the Carnegie International Peace Foundation, told the "Finance" reporter the day before the ruling that based on the past legal cooperation experience of Canada with friendly diplomatic countries, the results are likely to be unfavorable to her.

"Finance" reporters checked the statistics of the Canadian Ministry of Justice's extradition application from 2008 to 2018 and found that there were 798 extradition applications, 626 people were arrested, and in the end only 8 were lifted or extradition refused.

However, the above process is only the usual extradition process. Meng Wanzhou's situation is even more complicated.

Before this, Meng Wanzhou's defense lawyer team had filed a civil lawsuit accusing relevant Canadian government agencies of infringing on Meng Wanzhou's constitutional rights when arresting her, such as helping the FBI seize her personal electronic devices and copying the information therein. These are all flaws in extradition law enforcement and may have an impact on the outcome.

In addition, Meng Wanzhou's defense lawyer team pointed out that the extradition case has become a "political case". The ultimate goal of the US judicial department seeking extradition to Meng Wanzhou is to crack down on Huawei, and US President Trump also expressed his influence on the case in public. Both of the above points can be the reason for Meng Wanzhou to appeal to the Supreme Court of Canada to request the overturn of the extradition case. Whichever one ends up being supported by the Supreme Court of Canada, it may change the outcome of the extradition case.

The Canadian Attorney General's decision to approve extradition must take into account the relevant provisions of the Extradition Act, the requirements of the Canadian Charter of Rights and Freedoms, and all statements of the applicant for extradition and the extraditionee.

Canada's Extradition Act lists a series of compulsory and discretionary reasons for refusal to extradition. Mandatory reasons may include charges of injustice in any case, or charges made on grounds of discrimination. Article 46 of the Extradition Act, the Refusal in extradition agreement provides that political persecution can also be used as a mandatory reason for refusing extradition.

If the extradition result will result in a violation of the basic principles of justice stipulated in the Canadian Charter of Rights and Freedoms, the Canadian Attorney General must choose to refuse extradition.

If the attorney general finally approves the extradition application, then Canada and the United States will complete the extradition transfer procedures within 45 days unless the extradition process is interrupted due to an appeal or judicial review.

Considering that both the prosecution and the defense can apply for an appeal and make full use of the appeal procedure, it may take 2-3 years for Meng Wanzhou's extradition case to truly come to an end.

Source: According to public information, map: Li Li

The crisis spreads, industrial turmoil

This is a systemic risk, involving the global supply chain of multiple technology industries, and it is far more affected by Huawei

Timothy O'Toole believes that the US government directly points to Huawei's new export controls and entity list restrictions, which is more lethal than the extradition case against Meng Wanzhou.

Half a month ago, a new regulation issued by the U.S. Department of Commerce disrupted the global chip industry.

htmlOn May 15, the U.S. Department of Commerce first announced a 90-day extension of the temporary universal license for Huawei and its affiliated companies on the "Entity List", with the latest deadline being August 13, 2020; then issued an export ban requiring foreign companies using U.S. chip manufacturing equipment to obtain an export license before supplying.

ban last year was only targeted at US companies. The revised new regulations, even if they are not American semiconductor companies, if they use equipment and technologies listed as the US Business Regulatory List (CCL), they still need to obtain permission from the US government before producing chips for Huawei. The United States previously imposed an embargo on Huawei, but left a hole. As long as the use of US technology does not exceed 25%, there is no need to obtain a US administrative license.

Judging from the pace and intensity of the release of the new regulations, the US government's containment of Huawei and even China's technology industry not only shows no signs of loosening, but the upgrade trend is also very obvious.

Bao Doug commented to the reporter of "Finance" that the Meng Wanzhou case is a tactic in the United States' strategy to bring Huawei down. Some forces in the Trump administration want to end Huawei. They seem to think that putting pressure on Meng Wanzhou will gain something, but Huawei has not succumbed to the pressure.

Huawei's supply chain is all over the world, including the United States. The interpretation of the new round of sanctions initiated by the industry and the outside world is relatively pessimistic. In accordance with the new requirements of the US Department of Commerce, various types of wafer foundries and packaging and testing plants such as TSMC, SMIC, and Huahong Hongli that use American equipment in China and abroad will not be able to manufacture chip products for Huawei without obtaining a US license in the future, which is equivalent to blocking Huawei's self-developed chips.

Huawei's chip company HiSilicon is Huawei's source of confidence. In May this year, international market research firm IC Insights announced the sales rankings of the top ten semiconductor manufacturers in the world in the first quarter of 2020. Huawei HiSilicon ranked tenth, becoming the first mainland Chinese company to be among the top ten semiconductor suppliers in the world.

In this report, the top 10 semiconductor manufacturers are Intel, Samsung, TSMC, Hynix, Micron, Broadcom, Qualcomm, Texas Instruments, Nvidia, and HiSilicon. 6 are American companies, 2 are Korean companies, and 1 each from Taiwan and mainland China.

specifically affects Huawei's various line businesses, there are two points worth referring to in the conclusions provided by Xinda Electronics: First, Huawei's communications business has been fully de-Americanized last year, and will continue to grow rapidly this year with the acceleration of 5G construction. 2. In the short term, it will be adversely affected on the high-end mobile phone side, and the long-term impact will be mainly reflected in the foundry of high-end chips. Huawei can come up with a response strategy that should be fully supported by leading manufacturing and packaging companies in mainland China such as SMIC and Changdian Technology.

However, because American technology companies have absolute voice in the global chip industry chain, although SMIC's related technological progress will accelerate (14-nanometer mass production this year), there is still a lot of gap with Huawei's current positioning and strategy. It takes less time for China's chip industry chain to catch up with the United States.

Huawei’s decision-making level attaches great importance to this new regulation. On May 18, at Huawei's 17th Global Analyst Conference, Huawei's rotating chairman Guo Ping publicly responded that Huawei strongly opposes the US Department of Commerce's direct product rules only for Huawei, and expects that its business will inevitably be affected. It will do its best to find solutions. It also hopes that customers and suppliers will work with Huawei to do their best to eliminate the adverse effects of this discriminatory rule.

Guo Ping's response focuses on how to "do your best efforts to find a solution" and "work with customer suppliers to eliminate the adverse effects of this discriminatory rule."

The U.S. government has increased its restrictions on Huawei. As late as January this year, the industry has been in panic. Different companies have different considerations and different solutions, but the ultimate goal is the same - they are unwilling to lose big customers like Huawei.

A person from Huawei's Taiwanese supply chain manufacturer told the reporter of "Finance" that the company has evaluated this matter for nearly half a year, and the conclusion is that shipped to a module factory is basically risk-free. He said that legal affairs can revise the new shipment agreement template and do not ship directly to Huawei, and avoid risks as much as possible.

He even said that if needed, module factories can also pass the risks to Huawei itself, just like them. "We hope to make money from Huawei, it's business," he said.

Taiwan semiconductor manufacturing company TSMC is the world's largest chip manufacturer, with the world's most advanced chip production technology, and has almost captured more than 90% of the world's 5G chip orders. This is a company that Huawei finds difficult for it to find alternative manufacturers in the short term. In turn, it is difficult for TSMC to leave Huawei, which is more than 15% of its revenue comes from Huawei.

Some media reports said that the two companies are actively using the three-month window to save themselves. TSMC is actively contacting chip customers such as NVIDIA, AMD, MediaTek and Qualcomm, hoping to coordinate the orders of these major customers in order to divert production capacity to supply Huawei. TSMC strives to help Huawei produce enough chips in a 120-day buffer period. TSMC has limited production capacity. If it is not coordinated, it will be difficult to produce enough chips for Huawei within 120 days, so that Huawei will not cut off supply this year.

htmlOn the afternoon of May 26, in response to this rumor, TSMC officially responded, "The company does not disclose customer order information and cannot respond to market rumors."

has leaked several months ago due to the escalation of sanctions, and the two companies are extremely likely to make plans in advance.

Another seemingly abnormal move by TSMC was that on May 15, the same day the new regulations of the U.S. Department of Commerce were released, the company confirmed that it would establish a $12 billion chip factory in Arizona and put into operation in 2024, which mainly produces the most advanced 5nm process. Whether to set up a new factory in the United States has not made clear statements before. Chairman Liu Deyin stated at the first quarter financial report briefing of this year that investment in the United States must comply with three major requirements: economies of scale, cost-effective costs, and complete personnel organization and supply chain.

Many industry veterans who were interviewed by reporters from Finance expressed their understanding. Some people analyzed that TSMC's production cannot be separated from the technical support of the United States. If TSMC becomes the next Huawei, its compressive resistance may not be as good as Huawei. But the relatively favorable condition is that chip manufacturing is not an intensive processing industry, and low-end manpower is needed. Although the cost of opening a factory in the United States will be much higher than that of Taiwan, for TSMC, it is not so high that it is unbearable.

Reference situation development, the chip industry is worried that the US ban on Huawei will continue to escalate. The core business of South Korea's Samsung Electronics and SK Hynix is ​​memory chips. Huawei is one of the five major customers of Samsung and SK Hynix, spending about 10 trillion won (about 8.1 billion US dollars) every year to purchase memory and flash chips from Korean suppliers. The products of the two Korean companies,

, were not included in the new ban on Huawei by the US, but the chip manufacturing process of the South Korean chip industry relies on American technology from design, manufacturing to packaging. Whether it is memory or non-memory chips, US technology accounts for about 30% of South Korean chip production, and it is impossible to abandon US technology in the entire process. If the United States' restrictive actions against Huawei are further escalated, South Korean giants will inevitably suffer losses.

"Finance" reporter found that the US restriction on Huawei has brought about changes in the industry structure, which has a huge impact for some companies. Last year, Huawei launched the Plan B spare tire plan, focusing on diversified suppliers, focusing on supply chain security and localization.

Huawei is the core customer of Daliguang, a Taiwanese optical components company. A person from the company who did not want to be named revealed to the "Finance" reporter that Huawei's supplier diversification strategy has caused Daliguang to lose a lot of market share. For example, mobile phone camera lenses with less than 20 million pixels were completely shared by Sunny and other second-tier lens manufacturers in mainland China. "One mobile phone, 4 cameras, Daliguang now only makes 48-megapixel main cameras. The others are Sunny."

Huawei's new flagship P40 this year. There are two biggest changes in the camera supply chain: Sunny Optics, a domestic optical product manufacturer, has entered a high-end lens supplier. Previously, this type of product was exclusively supplied by Daliguang; the main supplier of front camera modules was replaced by Qiu Ti Technology, a manufacturer of Chinese camera modules and fingerprint recognition modules.

The above-mentioned person believes that Qiuta Technology has entered Huawei's camera module supply chain for the first time, which shows that Huawei is enriching and strengthening its supply chain. But it won't be good news for companies like Daliguang. For companies with smaller sizes and less important in the industry chain, such changes may endanger survival.

A person from Huawei's industrial chain company said, "Getting Huawei's orders can create many companies, but on the other hand, losing Huawei will also make some companies uncomfortable or even die.

Meng Wanzhou Canada incident was the beginning of Huawei's sanctions. Since then, the US government has been willing to "kill one thousand enemies and hurt 800 themselves" and has continued to upgrade the sanctions, causing global turmoil in the technology industry. Can this "Huawei robbery" still have a non-lose solution

pic/Visual China

text | Xie Lirong Jin Yan Chen Xiaoxiao Li Yinfeng

edit | Mark

Huawei Chief Financial Officer Meng Wanzhou lost the first opportunity to regain freedom.

At 9 a.m. on May 27, Canada, Deputy Chief Justice of the Supreme Court of British Columbia, Canada, Heather Holmes, notified Meng Wanzhou's defense lawyer team and Canadian government lawyers: Meng Wanzhou's "double crime" was established and rejected Meng Wanzhou's request to terminate the extradition.

Meng Wanzhou's side will definitely appeal and the extradition case will continue. After the ruling of

came out, a lighthouse picture before dawn was circulated again on Chinese social media at 3 a.m. At the beginning of the Meng Wanzhou incident in Canada, Huawei produced this picture to boost morale. If the scarred picture of the plane that Ren Zhengfei mentioned frequently before represents hardship, this picture once represented hope.

At this point, Meng Wanzhou has been under surveillance in Canada for 532 days. On December 1, 2018, Meng Wanzhou was detained after taking off a flight from Cathay Pacific to Vancouver, Canada. Later that day, she originally planned to board an intermodal flight to Mexico. Ten days later, Meng Wanzhou was asked to monitor her living in Canada, wearing electronic monitoring foot rings on her feet, and her range of movement was limited. Most of the time, her life was dull. In early 2019, Ren Zhengfei mentioned Meng Wanzhou in an interview with foreign media. He said that this incident actually improved the relationship between father and daughter. "Now she understands how difficult life may be."

But Judge Holmes's ruling does not mean that things are over.

Meng Wanzhou's extradition case will enter the next stage. At the hearing held in June, the focus of the prosecution and defense will focus on "whether Canadian officials' arrest of Meng Wanzhou complies with the law enforcement procedures."

Refer to the extradition flowchart provided by the official website of the Canadian Ministry of Justice. At present, the first phase has been completed, and now is the end of the second phase of the judge's ruling.

Since the result of this ruling is not good for Meng Wanzhou, Meng Wanzhou can appeal to the Supreme Court of Canada to apply for a final ruling and simultaneously apply for compliance review of judicial procedures.

If there is no appeal (there is almost no possibility), the extradition case will enter the third phase and be transferred to the Canadian Attorney General for review and approval. After approval by the Canadian Attorney General, the extradition transfer process is initiated. In other words, Meng Wanzhou lost only the first opportunity, and the game continued.

Source:

Canadian Ministry of Justice, drawing: Li Li

3 days ago, the domestic country was more optimistic about the result of this ruling. People are willing to believe that Meng Wanzhou will soon be able to return to China once Heather Holmes declares a "double crime" invalid.

This expectation is too optimistic. Both parties can appeal and apply for judicial review of the judge's ruling. Assuming that it is another outcome, Canadian government lawyers representing the U.S. judiciary can also appeal to overturn existing rulings. If a Canadian government lawyer appeals, he may also apply to the court to restrict Meng Wanzhou's departure. In other words, Meng Wanzhou can indeed be released in court, but cannot leave Canada. After the results of

came out, Huawei headquarters issued a statement saying, "I expressed disappointment with the British Columbia High Court's verdict. We have always believed that Ms. Meng is innocent and will continue to support Ms. Meng's search for fair judgments and freedoms. We hope that Canada's judicial system can ultimately restore Ms. Meng's innocence. Ms. Meng's lawyer team will work tirelessly to ensure justice is upheld."

As of press time, the Chinese Ministry of Foreign Affairs has not responded to this. At the regular press conference on May 26, Foreign Ministry spokesman Zhao Lijian said: "China's position on the Meng Wanzhou incident is consistent and clear.The United States and Canada abused their bilateral extradition treaties and took compulsory measures against Chinese citizens arbitrarily, seriously infringing on the legitimate rights and interests of Chinese citizens. This is a serious political incident. The Chinese government is unswerving in safeguarding the legitimate rights and interests of Chinese citizens. The Canadian side should effectively correct its mistakes, release Ms. Meng Wanzhou immediately, and ensure that she returns to China safely, so as not to continue to damage China-Canada relations. "

Meng Wanzhou incident was the beginning of the US government's sanctions on Huawei. Since then, Huawei has been included in the embargo list by the US government, and its scope of control has been continuously expanded, and its efforts have continued to escalate. The incident is still developing in a more severe direction. During this period, turmoil in the global technology industry chain has emerged, and it is still unknown whether the US technology industry can survive alone.

combined with the negative impact of the new crown epidemic on the global economy, the academic industry has been blocked from economic globalization and global technology The atmosphere of concern about industrial decoupling is becoming increasingly strong, and everything is moving in a direction that looks bad. Every party in the incident cannot avoid pressure.

The key "double crime"

This ruling is the most important ruling, but it is far from the final ruling. The pressure is currently shifting to Meng Wanzhou's legal team

In the ruling statement issued by the Supreme Court of British Columbia, Heather Holmes detailed the basis for the allegations, saying that these were the key content that prompted her to commit a "double crime". A reporter from "Finance" sorted out some of the important information.

. Two Reuters reports in December 2012 and January 2013 revealed that Skycom is selling computer equipment made in the United States to Iran. The report also pointed out that Huawei and Skycom have a very close ties, and mentioned that Meng Wanzhou served as the director of Skycom from February 2008 to April 2009. Members of the meeting.

Second, HSBC asked Huawei for relevant information after learning about Reuters’ reports, and Huawei’s representatives denied it. In August 2013, Meng Wanzhou said that Huawei strictly abides by the US trade sanctions on Iran, and Huawei and Skycom are just ordinary trade partnerships. Although Huawei was a shareholder of Skycom before, she was a member of Skycom’s board of directors, but the shares have been sold and she has also withdrawn from Skycom’s board of directors. Huawei Business deals with Iran are carried out through local branches. Huawei's branch in Iran have no business deals with HSBC. After the meeting, Meng Wanzhou also sent the English version of Powerpoint file used to introduce relevant content to the senior management of HSBC.

Third, HSBC Global Risk Committee held a meeting in London on March 31, 2014 to discuss "reputation and regulatory issues" related to Huawei, and finally decided to retain Huawei's business. When making this decision, the main basis of the committee was Meng Wanzhou Assurances provided during the meeting in August 2013. One month after the committee made its decision, HSBC provided Huawei with a proposed $900 million credit arrangement. About a year later, HSBC, along with other international banks, provided Huawei with $1.5 billion in syndicated loans.

its fourth, although Huawei sold all its shares in Skycom before August 2013 and Meng Wanzhou also withdrew from the Skycom board, in fact, Huawei still continues to control Skycom and its banking and business operations in Iran. Skycom employees have Huawei email addresses and industrial signs, and are using stationery with Huawei logo. Skycom's directors and their bank account signatories are Huawei employees. The company that purchased Skycom shares sold by Huawei was established through Huawei financing, and its banking and business operations were under Huawei's control.

Fifth, Huawei’s real relationship with Skycom is crucial to HSBC’s decision whether to continue to retain Huawei as its customer. Meng Wanzhou's false statements at the Hong Kong meeting in August 2013 misrepresented the actual relationship, putting HSBC at risk of fines and serious penalties for violating the Delayed Prosecution Agreement (DPA) and the U.S. trade ban. These misrepresentations also put HSBC at economic and reputational risks.

These allegations come from U.S. prosecutors.Heather Holmes stressed that whether the above allegations are true has not been finalized by the Canadian court, but in order to assess whether the double crime requirement is met, the court will examine whether the act itself is illegal.

Based on the above allegations of conduct, the US Department of Justice believes that Meng Wanzhou is deliberately defrauding financial institutions and putting him at the dual risks of huge financial losses and reputation losses.

Meng Wanzhou's defense team believes that all the allegations are based on the US trade sanctions against Iran. Without the US trade sanctions against Iran, there would be no subsequent risk of all fraud and financial and credibility losses. Canada withdrew from trade sanctions against Iran three years ago, so the premise of fraud charges does not exist in Canada, and similar behaviors will not be accused of crimes in Canada.

Heather Holmes believes that the so-called illegal act is essentially the intentional creation of false statements in bank customer relationships, putting HSBC in danger. While U.S. sanctions are part of driving the entire incident and are a necessary condition to explain how HSBC faces risks, sanctions themselves are not an inherent part of illegal acts.

In view of this reason, Heather Holmes disagrees with Meng Wanzhou's defense team that US sanctions are the prerequisite for forming HSBC's risks.

She believes that fraud is an act with great potential boundaries and a wide range of circumstances, and the act of identifying the crime of fraud should not be completely applied to a fixed standard. Recognizing Meng Wanzhou's defense team's approach to analyzing double crimes will seriously limit Canada's ability to fulfill international obligations in the context of extradition fraud and other economic crimes.

In this ruling of more than 20 pages, Heather Holmes emphasized that although Canada has not imposed sanctions on Iran, this does not affect Meng Wanzhou's prosecution in Canada on the same charge. That is, "double crime".

The so-called double crime refers to the acts that Meng Wanzhou was accused of in Canada and the United States, the extradition applicant, can be considered a criminal act. This is a necessary condition for the approval of extradition cases in Canada – allegations against suspects should constitute a crime in both Canada and in countries seeking extradition.

According to the Canadian legal system, a double crime is established as long as the extraditioner's behavior is also considered a crime in Canada. It doesn't matter which crime is charged, and the specific elements of the crime do not have to match foreign crimes; if the extraditioner faces charges of multiple crimes, as long as one of the crimes should be punished in Canada, a double crime can be considered valid.

Meng Wanzhou's extradition case has undergone many rulings before this. These rulings are based on procedures such as bail application, extradition hearing process, evidence submission and testimony. This ruling is the first core ruling made by the Canadian judicial department after fully collecting information, listening to the statements and defenses of the alleged charges, and checking the relevant evidence.

Heather Holmes ruled that the "double crime" of Meng Wanzhou's extradition case was established, and the pressure was transferred to Meng Wanzhou's team. Although this ruling is important, it is far from the final ruling.

Referring to the extradition flowchart provided by the official website of the Canadian Ministry of Justice, we can find that the first phase has been completed, and now is the second phase, the Judicial stage.

At this time, Meng Wanzhou can appeal to the Supreme Court of Canada to apply for a final ruling and apply for compliance review of judicial procedures simultaneously.

If there is no appeal (there is almost no possibility), the extradition case will enter the third stage and be transferred to the Canadian Attorney General for review and approval. Only after approval can the extradition transfer process be initiated.

Douglas Paal, an outstanding distinguished researcher at the Asian project of the Carnegie International Peace Foundation, told the "Finance" reporter the day before the ruling that based on the past legal cooperation experience of Canada with friendly diplomatic countries, the results are likely to be unfavorable to her.

"Finance" reporters checked the statistics of the Canadian Ministry of Justice's extradition application from 2008 to 2018 and found that there were 798 extradition applications, 626 people were arrested, and in the end only 8 were lifted or extradition refused.

However, the above process is only the usual extradition process. Meng Wanzhou's situation is even more complicated.

Before this, Meng Wanzhou's defense lawyer team had filed a civil lawsuit accusing relevant Canadian government agencies of infringing on Meng Wanzhou's constitutional rights when arresting her, such as helping the FBI seize her personal electronic devices and copying the information therein. These are all flaws in extradition law enforcement and may have an impact on the outcome.

In addition, Meng Wanzhou's defense lawyer team pointed out that the extradition case has become a "political case". The ultimate goal of the US judicial department seeking extradition to Meng Wanzhou is to crack down on Huawei, and US President Trump also expressed his influence on the case in public. Both of the above points can be the reason for Meng Wanzhou to appeal to the Supreme Court of Canada to request the overturn of the extradition case. Whichever one ends up being supported by the Supreme Court of Canada, it may change the outcome of the extradition case.

The Canadian Attorney General's decision to approve extradition must take into account the relevant provisions of the Extradition Act, the requirements of the Canadian Charter of Rights and Freedoms, and all statements of the applicant for extradition and the extraditionee.

Canada's Extradition Act lists a series of compulsory and discretionary reasons for refusal to extradition. Mandatory reasons may include charges of injustice in any case, or charges made on grounds of discrimination. Article 46 of the Extradition Act, the Refusal in extradition agreement provides that political persecution can also be used as a mandatory reason for refusing extradition.

If the extradition result will result in a violation of the basic principles of justice stipulated in the Canadian Charter of Rights and Freedoms, the Canadian Attorney General must choose to refuse extradition.

If the attorney general finally approves the extradition application, then Canada and the United States will complete the extradition transfer procedures within 45 days unless the extradition process is interrupted due to an appeal or judicial review.

Considering that both the prosecution and the defense can apply for an appeal and make full use of the appeal procedure, it may take 2-3 years for Meng Wanzhou's extradition case to truly come to an end.

Source: According to public information, map: Li Li

The crisis spreads, industrial turmoil

This is a systemic risk, involving the global supply chain of multiple technology industries, and it is far more affected by Huawei

Timothy O'Toole believes that the US government directly points to Huawei's new export controls and entity list restrictions, which is more lethal than the extradition case against Meng Wanzhou.

Half a month ago, a new regulation issued by the U.S. Department of Commerce disrupted the global chip industry.

htmlOn May 15, the U.S. Department of Commerce first announced a 90-day extension of the temporary universal license for Huawei and its affiliated companies on the "Entity List", with the latest deadline being August 13, 2020; then issued an export ban requiring foreign companies using U.S. chip manufacturing equipment to obtain an export license before supplying.

ban last year was only targeted at US companies. The revised new regulations, even if they are not American semiconductor companies, if they use equipment and technologies listed as the US Business Regulatory List (CCL), they still need to obtain permission from the US government before producing chips for Huawei. The United States previously imposed an embargo on Huawei, but left a hole. As long as the use of US technology does not exceed 25%, there is no need to obtain a US administrative license.

Judging from the pace and intensity of the release of the new regulations, the US government's containment of Huawei and even China's technology industry not only shows no signs of loosening, but the upgrade trend is also very obvious.

Bao Doug commented to the reporter of "Finance" that the Meng Wanzhou case is a tactic in the United States' strategy to bring Huawei down. Some forces in the Trump administration want to end Huawei. They seem to think that putting pressure on Meng Wanzhou will gain something, but Huawei has not succumbed to the pressure.

Huawei's supply chain is all over the world, including the United States. The interpretation of the new round of sanctions initiated by the industry and the outside world is relatively pessimistic. In accordance with the new requirements of the US Department of Commerce, various types of wafer foundries and packaging and testing plants such as TSMC, SMIC, and Huahong Hongli that use American equipment in China and abroad will not be able to manufacture chip products for Huawei without obtaining a US license in the future, which is equivalent to blocking Huawei's self-developed chips.

Huawei's chip company HiSilicon is Huawei's source of confidence. In May this year, international market research firm IC Insights announced the sales rankings of the top ten semiconductor manufacturers in the world in the first quarter of 2020. Huawei HiSilicon ranked tenth, becoming the first mainland Chinese company to be among the top ten semiconductor suppliers in the world.

In this report, the top 10 semiconductor manufacturers are Intel, Samsung, TSMC, Hynix, Micron, Broadcom, Qualcomm, Texas Instruments, Nvidia, and HiSilicon. 6 are American companies, 2 are Korean companies, and 1 each from Taiwan and mainland China.

specifically affects Huawei's various line businesses, there are two points worth referring to in the conclusions provided by Xinda Electronics: First, Huawei's communications business has been fully de-Americanized last year, and will continue to grow rapidly this year with the acceleration of 5G construction. 2. In the short term, it will be adversely affected on the high-end mobile phone side, and the long-term impact will be mainly reflected in the foundry of high-end chips. Huawei can come up with a response strategy that should be fully supported by leading manufacturing and packaging companies in mainland China such as SMIC and Changdian Technology.

However, because American technology companies have absolute voice in the global chip industry chain, although SMIC's related technological progress will accelerate (14-nanometer mass production this year), there is still a lot of gap with Huawei's current positioning and strategy. It takes less time for China's chip industry chain to catch up with the United States.

Huawei’s decision-making level attaches great importance to this new regulation. On May 18, at Huawei's 17th Global Analyst Conference, Huawei's rotating chairman Guo Ping publicly responded that Huawei strongly opposes the US Department of Commerce's direct product rules only for Huawei, and expects that its business will inevitably be affected. It will do its best to find solutions. It also hopes that customers and suppliers will work with Huawei to do their best to eliminate the adverse effects of this discriminatory rule.

Guo Ping's response focuses on how to "do your best efforts to find a solution" and "work with customer suppliers to eliminate the adverse effects of this discriminatory rule."

The U.S. government has increased its restrictions on Huawei. As late as January this year, the industry has been in panic. Different companies have different considerations and different solutions, but the ultimate goal is the same - they are unwilling to lose big customers like Huawei.

A person from Huawei's Taiwanese supply chain manufacturer told the reporter of "Finance" that the company has evaluated this matter for nearly half a year, and the conclusion is that shipped to a module factory is basically risk-free. He said that legal affairs can revise the new shipment agreement template and do not ship directly to Huawei, and avoid risks as much as possible.

He even said that if needed, module factories can also pass the risks to Huawei itself, just like them. "We hope to make money from Huawei, it's business," he said.

Taiwan semiconductor manufacturing company TSMC is the world's largest chip manufacturer, with the world's most advanced chip production technology, and has almost captured more than 90% of the world's 5G chip orders. This is a company that Huawei finds difficult for it to find alternative manufacturers in the short term. In turn, it is difficult for TSMC to leave Huawei, which is more than 15% of its revenue comes from Huawei.

Some media reports said that the two companies are actively using the three-month window to save themselves. TSMC is actively contacting chip customers such as NVIDIA, AMD, MediaTek and Qualcomm, hoping to coordinate the orders of these major customers in order to divert production capacity to supply Huawei. TSMC strives to help Huawei produce enough chips in a 120-day buffer period. TSMC has limited production capacity. If it is not coordinated, it will be difficult to produce enough chips for Huawei within 120 days, so that Huawei will not cut off supply this year.

htmlOn the afternoon of May 26, in response to this rumor, TSMC officially responded, "The company does not disclose customer order information and cannot respond to market rumors."

has leaked several months ago due to the escalation of sanctions, and the two companies are extremely likely to make plans in advance.

Another seemingly abnormal move by TSMC was that on May 15, the same day the new regulations of the U.S. Department of Commerce were released, the company confirmed that it would establish a $12 billion chip factory in Arizona and put into operation in 2024, which mainly produces the most advanced 5nm process. Whether to set up a new factory in the United States has not made clear statements before. Chairman Liu Deyin stated at the first quarter financial report briefing of this year that investment in the United States must comply with three major requirements: economies of scale, cost-effective costs, and complete personnel organization and supply chain.

Many industry veterans who were interviewed by reporters from Finance expressed their understanding. Some people analyzed that TSMC's production cannot be separated from the technical support of the United States. If TSMC becomes the next Huawei, its compressive resistance may not be as good as Huawei. But the relatively favorable condition is that chip manufacturing is not an intensive processing industry, and low-end manpower is needed. Although the cost of opening a factory in the United States will be much higher than that of Taiwan, for TSMC, it is not so high that it is unbearable.

Reference situation development, the chip industry is worried that the US ban on Huawei will continue to escalate. The core business of South Korea's Samsung Electronics and SK Hynix is ​​memory chips. Huawei is one of the five major customers of Samsung and SK Hynix, spending about 10 trillion won (about 8.1 billion US dollars) every year to purchase memory and flash chips from Korean suppliers. The products of the two Korean companies,

, were not included in the new ban on Huawei by the US, but the chip manufacturing process of the South Korean chip industry relies on American technology from design, manufacturing to packaging. Whether it is memory or non-memory chips, US technology accounts for about 30% of South Korean chip production, and it is impossible to abandon US technology in the entire process. If the United States' restrictive actions against Huawei are further escalated, South Korean giants will inevitably suffer losses.

"Finance" reporter found that the US restriction on Huawei has brought about changes in the industry structure, which has a huge impact for some companies. Last year, Huawei launched the Plan B spare tire plan, focusing on diversified suppliers, focusing on supply chain security and localization.

Huawei is the core customer of Daliguang, a Taiwanese optical components company. A person from the company who did not want to be named revealed to the "Finance" reporter that Huawei's supplier diversification strategy has caused Daliguang to lose a lot of market share. For example, mobile phone camera lenses with less than 20 million pixels were completely shared by Sunny and other second-tier lens manufacturers in mainland China. "One mobile phone, 4 cameras, Daliguang now only makes 48-megapixel main cameras. The others are Sunny."

Huawei's new flagship P40 this year. There are two biggest changes in the camera supply chain: Sunny Optics, a domestic optical product manufacturer, has entered a high-end lens supplier. Previously, this type of product was exclusively supplied by Daliguang; the main supplier of front camera modules was replaced by Qiu Ti Technology, a manufacturer of Chinese camera modules and fingerprint recognition modules.

The above-mentioned person believes that Qiuta Technology has entered Huawei's camera module supply chain for the first time, which shows that Huawei is enriching and strengthening its supply chain. But it won't be good news for companies like Daliguang. For companies with smaller sizes and less important in the industry chain, such changes may endanger survival.

A person from Huawei's industrial chain company said, "Getting Huawei's orders can create many companies, but on the other hand, losing Huawei will also make some companies uncomfortable or even die."

Can there be a solution

The US government wants to transfer production chains and other products from China, and there are many difficulties and high costs, but avoiding double losses is not completely without a chance

Miller & Chevalier Law Firm Timothy O'Toole is a professional lawyer specializing in export control legal issues. From analyzing possible solutions to Huawei's export control legal perspective, he raised a concern: from inclusion in the list to setting up a buffer period to escalating the scope of sanctions, the US government has repeatedly stated that this aims to "change Huawei's behavior." But "From the perspective of lawyers, I have not seen what the specific requirements given by the government are, how can Huawei do to change all this? "

O'Toole believes that it would be very helpful if both sides can discuss how Huawei should cooperate to be removed from the entity list issue. In these discussions, the U.S. government needs to clearly state what it is expected that Huawei will do, and that Huawei can respond directly to determine whether the U.S. government's request is enforceable and whether Huawei agrees to implement it. "These discussions may be already underway, and if not, the only way I see to solve this problem. "

This solution has a lesson in history. In early 2018, ZTE was controlled by the United States exports. More than two months later, ZTE reached a settlement agreement with the U.S. Department of Commerce. At the cost, ZTE paid a fine of US$2.292 billion, replaced its board of directors and senior management teams within 30 days, accepted US supervisors, and was always asked by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, and accepted real-time monitoring in accordance with the U.S. export control law.

But Huawei is not ZTE.

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Semiconductor), the core conclusion is that if the United States continues to upgrade its commercial chip export controls on China, the long-term leading position of US semiconductor companies will be threatened, and the negative impact on the US semiconductor industry is far-reaching, even far exceeding the expected impact of the "Made in China 2025" policy.

Among the 32 semiconductor product lines in the world, 18 are Among the , the global market share of at least one non-US company has 10% or more, making it a viable option to replace US companies.

In the short term, the losses of US companies will be the benefits of China and global competitors. Boston Consulting expects Chinese suppliers to acquire about half of the revenue abandoned by US companies, allowing China to increase its global market share to around 7% and increase the self-sufficiency of semiconductor design from 14% to 25%.

In the long term, the US's global leadership in the chip field is built on a benign innovation cycle, with huge investment in innovation and R&D and requiring global market support. The loss of US semiconductor companies will lead to a significant reduction in R&D and capital expenditures, and losses of 15,000 to 40,000 High-skilled direct work.

Boston Consulting pointed out that due to South Korea's strong capabilities in key products such as memory, displays, image processing and mobile processors, and its ability to expand production capacity, South Korea may replace the United States and become a leader in the global semiconductor industry.

The United States has always been a global semiconductor leader, accounting for 45% to 50% of the world's share. Such results are probably not what the U.S. government is willing to see.

Boston Consulting believes that the pressure on the U.S. government is that to avoid these negative results, U.S. policy makers must design solutions that should simultaneously solve U.S. national security issues and protect global market access for U.S. semiconductor companies, which is crucial to U.S. economic competitiveness and national security.

But this solution with the best of both worlds is hard to find.

Bao Doug told the "Finance" reporter that he does not think Huawei is a pawn in the Sino-US dispute or a card in the Sino-US dispute, although the situation may change. Huawei's existence is seen as an existential threat to US technology dominance.

Bao Doug's views are similar to those of Boston Consulting's report.For the United States, the goal is to continue to maintain its dominance, but decoupling from China will cause the United States to lose a lot of market share, which is expensive, and may not necessarily curb China's technological progress.

A professor from a well-known American university who did not want to be named told the Finance reporter that behind the US government's series of tactics is to buy time for Trump's technological and industrial policy adjustments, cooperate with the transfer of the United States, and curb China's industrial upgrading momentum.

Former U.S. Deputy Secretary of State and former World Bank President Robert Zoellick served as U.S. trade negotiator in 2001 and participated in the negotiations on China's accession to the World Trade Organization (WTO). In Sino-US relations, because of his kindness and constructiveness, he has now become a representative of the American minority.

Zoellick was interviewed by a reporter from Finance on April 28 this year. He pointed out that around 1930, the United States had tried economic nationalism and closed-doing, but it promoted the Great Depression and indirectly stimulated World War II.

In Zoellick's view, globalization has not failed today, but it is fragile. It is difficult and expensive to transfer the production chain from China, and it is not in the interests of the United States or the American people. Taking this path will only exacerbate rather than alleviate the current crisis.

Zoellick told the reporter of Finance that his advice to China is that some changes will happen no matter what, and it is difficult to say how changes will appear, it depends on the global economic recovery. If China responds in a transparent and open way, and continues to work hard to cooperate and seek solutions, things will evolve in a good direction.

Scott Kennedy, deputy director of the U.S. Center for International Strategic Research (CSIS), believes that Huawei's way out is to either admit US allegations and reach some kind of preparatory agreement with the United States, or create transparency by listing abroad.

This article was created by the author of the Tree Project [Financial Magazine] and was exclusively published on Today's Headlines. It may not be reproduced without authorization.