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US Tightens Equipment Restrictions on China’s Huawei

Michael Behr

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Huawei

Under the new rules, companies will need licences to supply Huawei with all components, not just specially designed ones.

Chinese tech giant Huawei Technologies has had additional restrictions placed on it by the Trump administration aimed at stopping the company from buying computer chips made using US technology and restricting access to vital electronic components.

Previous rules made it difficult for companies using US technology to supply bespoke components to Huawei, with newer restrictions hitting off the shelf parts.

With the US being the dominant force in the production of equipment to produce mobile phone chips, the move will severely curtail Huawei as a major producer of handsets and 5G technology.

Secretary of State Mike Pompeo said that Huawei had been trying to evade the restrictions that were imposed on it by the US Commerce Department in May requiring global chipmakers using US technology to obtain a licence from the US government in order to work on designs for Huawei.

“Today, we dealt a direct blow to Huawei and the repressive Chinese Communist Party by further limiting Huawei’s ability to acquire US technology and compromise the integrity of the world’s networks and Americans’ private information,” Pompeo tweeted.

US Commerce Secretary Wilbur Ross said that Huawei and its affiliates have been using third parties to access US technology “in a manner that undermines US national security and foreign policy interests”.

In comments to Fox Business, he added: “The new rule makes it clear that any use of American software or American fabrication equipment is banned and requires a licence.”

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However, a statement from the US Semiconductor Industry Association, which previously supported the old licensing requirement, warned that restricting semiconductor sales could have a negative effect on the industry.

In a statement, the group said: “We are still reviewing the rule, but these broad restrictions on commercial chip sales will bring significant disruption to the US semiconductor industry.

“We are surprised and concerned by the administration’s sudden shift from its prior support of a more narrow approach intended to achieve stated national security goals while limiting harm to US companies.

“We reiterate our view that sales of non-sensitive, commercial products to China drive semiconductor research and innovation here in the US, which is critical to America’s economic strength and national security,”

The move comes amidst souring US-China relations, with Chinese tech companies, including popular video-sharing app TikTok, bearing the brunt of US action.

The move also saw an additional 38 names linked to Huawei added to a trade blacklist. This raises the list to a total of 152 affiliates, with Huawei being added first in May 2019.

Under a new rule as part of the restrictions, companies on the blacklist will need to obtain a licence when using a blacklisted company “as a purchaser, intermediate consignee, ultimate consignee, or end-user”.

The May restrictions will not take full effect until September 14th. Huawei previously outsourced semiconductor production to Taiwan Semiconductor Manufacturing Co (TSMC), which uses equipment from US companies. TSMC has since said it will not ship to Huawei after September 15.

Michael Behr

Senior Staff Writer

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