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LightReading summarized the challenges faced by Neophotonics as a result of the recent May 2019 ban on component shipments from US companies to Huawei. The article quoted Andrew Schmitt at length about the potential outcome of the ban and the prospect for M&A activity involving Neophotonics as a result.

He notes that Huawei is a “very important company to China,” and that the potential impact of an ongoing ban on US sales to Huawei would result in economic consequences that either the US nor China would want. “Logically, and based on precedent, I don’t see this ban lasting more than a few months, after which it would largely be back to business as usual. Huawei is very reliant on US technology. We have seen this movie before with ZTE.”

Schmitt adds that, even in the worst-case scenario, Neophotonics has enough important business to continue as a going concern with its other customers, particularly Ciena and Acacia.