US Plots New Huawei Restrictions Amidst China Tension

Ren Zhengfei, Founder and CEO, Huawei Technologies

New restrictions approved by top-level cabinet officials would put Huawei under more pressure, while also hobbling US semiconductor manufacturing companies

Senior US administration officials have agreed to a plan aimed at further limiting the chips that can be sold to Chinese telecoms equipment giant Huawei, in a move that could also have a significant impact on US technology makers.

The move comes amidst heightened tension between the US and China, which were already locked in a trade conflict and more recently have traded barbs over each country’s response to the coronavirus pandemic.

At a meeting last Wednesday, top US cabinet officials agreed to advance a proposal that would stop companies that use US chipmaking equipmenet from selling advanced chips to Huawei, according to several reports.

The plan would particularly target Taiwan Semiconductor Manufacturing Co. (TSMC), which uses US chipmaking tools and manufactures chips designed by Huawei’s HiSilicon unit.

HuaweiNew restrictions

Taiwan-based TSMC is the world’s largest contract semiconductor manufacturer.

But the proposed restrictions could also have a significant impact on US firms such as Applied Materials, Lam Research and KLA that make semiconductor manufacturing equipment.

Gear from those three firms is widely used by semiconductor manufacturers, but they face stiff competition from the Netherlands’ ASML and others.

Such considerations prompted president Donald Trump last month to voice his opposition to the measures being proposed against Huawei.

“We don’t want to make it impossible to do business with us,” Trump said on Twitter at the time.

As a result, it’s unclear whether Trump would go along with the latest proposal.

The plan is part of ongoing efforts to put pressure on Huawei, which the US government calls a national security risk.

5G base stations

Huawei denies the US’ charges that it could carry out espionage for China via its technology.

Last May the US placed Huawei on a national security blacklist, but the company has continued to find ways to produce its equipment without technology manufactured in the United States.

Earlier this month, for instance, Bloomberg reported Huawei was ramping up its production of 5G base stations that do not use US-made components, selling more than 50,000 of the units in the fourth quarter.

Huawei has said it plans to return to using US technology when possible, but said the longer it goes without access to US suppliers, the more unlikely it becomes that it will be able to return to using them.