The possible move by UK-based chipset designer ARM to suspend all active contracts with Huawei underlines the spillover effect of the latest US crackdown on the Chinese company, which sets a bad precedent for the international order in technology cooperation, analysts said Thursday. 

Such a move puts the spirit of contracts and free market competition behind politics in an attempt to stifle Chinese tech firms. But it will have "limited impact" on Huawei in the short term, they noted.

ARM is reportedly cutting ties with Huawei, claiming that its designs contained US-origin technology that will be affected by the export control issued by the US authorities. 

A spokesperson of ARM said they wouldn't comment on the reports, but the company "is complying with all the laws and regulations set forth by the US government," according to a statement the company sent to the Global Times on late Wednesday night. 

Industry representatives believe this will deliver a significant blow to Huawei, as the company's major self-developed chipsets and mobile devices are based on ARM architecture. 

Along with Intel's X86 structure, ARM and X86 architecture are considered the lifelines for the CPU market and the core engines for smart devices. 

"This is far bigger than just banning Huawei phones in the US. If tomorrow any non-US tech company becomes too powerful, the US just has to play the so-called 'national threat card'," a veteran industry representative in the IoT sector based in Shenzhen, South China's Guangdong Province, told the Global Times. 

While US influence in the high tech sector is omnipresent, the tech cold war has officially become malignant competition for technology, which puts the spirit of contract and free market competition behind politics. 

"It sets off the new phase for the disorder of global tech competition, which will lead to the collapse of the current global cooperation in high technology," Fang Xingdong, founder of Beijing-based technology think tank ChinaLabs, told the Global Times on Wednesday.

However, industry analysts predict that the impact of this cut-off will be limited as the previous contract signed between Huawei and ARM v8 allows the former permanent access to the ARM v8 structure, so the development of new Huawei gadgets will not be affected.

"We've also received a notice that HiSilicon will launch a new Kirin chipset soon on May 30, which shows its operations are all normal now," Fang Jing, an industry analyst at China Merchants Securities told the Global Times on Thursday. 

According to its contracts, Huawei is not losing critical access to the ARM instruction set, which will ensure that HiSilicon, the semiconductor division of Huawei, can continue to develop on existing architecture. 

"It's time to show how capable HiSilicon really is and it's time to test Chinese real innovation spirit," Fang Xingdong said. 

Under US pressure, the supply chain is keeping a close eye on Huawei's suppliers and partners, as cutting off ties will pose a direct impact on the company's future supply of products, including smartphones and 5G bases.

"As it's widely believed that HiSilicon could work on existing ARM structure, it's more important that its major suppliers like TSMC are not pulling back under the US ban," Wang Yanhui, head of the Mobile China Alliance, told the Global Times on Thursday. 

TSMC, a major manufacturer of Huawei chipsets, said it has not been affected by the ban as it will continue shipment to Huawei, according to media reports on Thursday. Meanwhile, Panasonic, another supplier of its components, denied media reports that it has suspended supplies of some critical components to Huawei.