United States Tightens Export Screw On Huawei

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Trump administration expands its restrictions on Huawei, and bans suppliers from selling it chips that utilise US technology

The bad news keeps coming for China’s Huawei Technologies after the Trump administration on Monday expanded its restrictions against the networking giant.

The US has now further “restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software,” the US Commerce department announced.

Instead, a special licence will be required, which closes the loopholes in the sanctions that the US implemented in May this year, which allowed Huawei to access the tech via third parties.

Huawei logo

Export restrictions

Huawei of course has been on a US ‘entity blacklist’ since May 2019, but until recently it was still able to acquire American tech because the US Commerce Department keep extending its implementation of the entity listing and was able to buy semiconductors from companies outside the US, such as Taiwan’s TSMC.

But that changed in May this year when Huawei was barred from purchasing chips directly from none US companies – a move that Huawei said at the time threatened its survival.

But the US Commerce Department said the Chinese firm had continued to build chips by “commissioning their production in overseas foundries using US equipment”.

But now the new measures by the United States will make it increasingly difficult for Huawei to acquire chips (even if they are not designed specifically for Huawei), which in turn will threaten Huawei’s position as the leading smartphone supplier in the world.

Essentially, the new restrictions have been expanded to require third party companies to seek US permission – even if they are selling an ‘off the shelf’ general purpose designed chip.

The United States has also added 38 affiliates linked to Huawei, to its trade blacklist.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from US software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” said Commerce Secretary Wilbur Ross in a statement.

“As we have restricted its access to US technology, Huawei and its affiliates have worked through third parties to harness US technology in a manner that undermines US national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

Huawei has reportedly not responded to this latest development.

Potential impact

There is little doubt this latest move will hurt Huawei, but it will also hurt US chip firms such as Qualcomm, by depriving them of potential sales.

Huawei had already announced earlier this month that it will stop making its flagship Kirin chipsets from September.

That was because US sanctions on its suppliers had made it impossible for Huawei’s HiSilicon division to keep making the chipsets, as they utilised technology from US companies such as Synopsys.

The new US measures are also expected to impact other firms such as South Korea’s Samsung and SK Hynix, as well as Sony and Taiwanese chipset maker MediaTek.