US Tightens Export Controls In Move Aimed At Huawei

The US has tightened its export regulations in a move to put further pressure on Huawei and affiliates such as HiSilicon, which the US administration views as a national security threat.

Huawei has been barred from purchasing technology from US companies since May 2019, but the US Commerce Department said it had it had continued to build chips by “commissioning their production in overseas foundries using US equipment”.

“We must amend our rules exploited by Huawei and HiSilicon and prevent US technologies from enabling malign activities contrary to US national security and foreign policy interests,” US commerce secretary Wilbur Ross on Friday.

The new restrictions affect semiconductor designs and chipsets produced in non-US plants using “US equipment”, Ross said.

US commerce secretary Wilbur Ross. Image credit: US government

Regulation shift

The Chinese government said in an official statement that it would “firmly uphold Chinese firms’ legitimate and legal rights and interests”.

Most chip manufacturers around the world use equipment made by US companies including KLA, Lam Research and Applied Materials, according to a 2019 report by China’s Everbright Securities.

The change in regulations means that those manufacturers will now have to apply for a licence from the US Commerce Department before selling to customers such as Huawei or HiSilicon.

The US said it would allow silicon wafers already in production to be shipped to Huawei, as long as the shipments are complete as of 120 days from Friday.  The wafers must have already been in production as of Friday to qualify under the exemption.

Previously, the US’ Direct Product Rule exempted foreign-produced goods from US export controls if the goods contained less than 25 percent US-origin technology.

The change effectively eliminates that exemption, instead allowing US regulators to place restrictions on goods produced with certain US technology, such as certain US-made chip manufacturing equipment.

‘Arbitrary and pernicious’

The move is a blow to contract semiconductor manufacturers such as Taiwan’s TSMC, which makes chips for Huawei’s HiSilicon chip unit as well as Apple, Qualcomm and others.

Nikkei reported on Monday that TSMC halted new orders from Huawei following the rule change in order to comply with US export regulations.  TSMC did not explicitly deny the report but told Reuters it was “purely market rumour”.

Huawei said the US’ decision was “arbitrary and pernicious” and threatens to undermine the broader semiconductor industry.

“This new rule will impact the expansion, maintenance, and continuous operations of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries,” the company said in a statement.

Supply chain

The US has placed Huawei and 114 of its affiliates under export restrictions, but until now large parts of Huawei’s non-US supply chain have fallen outside of the regulations.

The move may invite relatiation from China, with the country ready to put US companies such as Apple, Cisco Systems and Qualcomm on its “unreliable entities list”, as well as suspending purchases of Boeing aeroplanes, China’s Global Times reported, citing a source.

Separately, the Commerce Department extended a temporary licence, set to expire on Friday, that allows US companies to continue temporarily doing business with Huawei through 13 August.  The agency said it expects this to be the final extension.

Some rural US telecommunications networks rely on Huawei equipment, and the temporary exemption, which has been in place since Huawei was placed on the US “entity list” in May 2019, was intended to allow these companies to find alternatives.

The US has also placed allies under pressure to bar Huawei equipment from their 5G wireless networks, saying the Chinese-made gear would present national security issues.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

Recent Posts

Signal Shows Data Collection Adverts Facebook Rejected

Signal has had user-targetted adverts on Instagram blocked, as messaging service attempts to highlight Facebook…

5 hours ago

Oversight Board Upholds Trump’s Facebook Suspension

Bad news for Donald. Facebook's 'Supreme Court' upholds suspension of Donald Trump account, but asks…

7 hours ago

US Presses TSMC For More Chips For Car Makers

Global silicon shortage continues, as US Commerce Department presses Taiwanese chipmakers to ease the supply…

7 hours ago

Starlink Signs Up 500,000 Pre-Orders For Satellite Internet

Elon Musk space venture SpaceX has already signed 500,000 customers on pre-order for its Starlink…

10 hours ago

Apple Vs Epic Games Court Battle Continues

Second day of courtroom showdown in the US reveals Epic Games management would have accepted…

12 hours ago

Trump Launches ‘Communications’ Website

Banned from social media for instigating US Capitol riot, Trump launches 'straight from the desk'…

13 hours ago