Washington halts licences for US companies to export to Huawei

The Biden administration has stopped granting US companies export licenses to Huawei as it moves closer to banning the sale of American technology to the Chinese telecom equipment giant.

Several people familiar with the administration’s discussions said the Commerce Department has notified other companies that it will no longer grant licenses to any group that wants to export American technology to Huawei.

The move is the latest sign of Washington’s campaign to ban the Shenzhen-based technology company, which US security officials believe is helping China conduct espionage. Huawei denies involvement in espionage.

The Trump administration in 2019 imposed restrictions on the export of American technology to Huawei by adding the group to a blacklist called the “material list”. The move was part of a crackdown on Chinese companies that Washington believed could pose a threat to US national security.

But the Commerce Department continued to grant export licenses to other companies, including Qualcomm and Intel, to provide Huawei with technology that was not related to high-speed 5G networks.

Over the past two years, President Joe Biden has taken a very aggressive stance on China, particularly in the area of ​​high-tech. In October, he imposed major restrictions on the supply of high-end electronic equipment to Chinese companies.

Also Read :  Market Rally Technically Dead, Slowing Economy, Earnings Expectations, Fed Week

Alan Estevez, director of trade and defense at the Commerce Department, has been leading a policy review of China to determine what authorities should do to prevent the Chinese military from using US weapons technology.

Martijn Rasser, a technical expert at CNAS, a think tank, said the latest developments were “very important”.

“The Commerce Department’s actions are driven by the fact that Huawei as a company is a very different animal than it was four years ago when it focused on 5G,” Rasser, a former CIA director, said of its growth. areas such as undersea cables and cloud computing.

Washington’s move comes as Huawei’s operations have stabilized. Eric Xu, the company’s rotating chairman, said in December 2023 it will be the first year that Huawei will return to “business as usual”. According to the company, its 2022 revenue was unprofitable at Rmb636.9bn ($94bn), after a sharp decline in 2021.

Also Read :  China's economy badly hit by Covid lockdowns, negatively affecting businesses, consumers

The company survived by diversifying into private and public enterprises, particularly in China, as well as its own growing business. The fact that the US still allowed Huawei’s exports also contributed to the overall collapse. Huawei is believed to be supporting projects in China aimed at developing autonomous semiconductor systems, efforts that Washington has also begun to pursue.

Industry officials said it was too early to tell how Huawei had changed. “An indefinite blanket suspension would be dangerous for Huawei, but the consequences of that would be different,” said a legal expert involved in the application for export licenses.

A manager at a semiconductor manufacturing company who has worked with Huawei said the changes will come after export licenses expire. “Since there are no details about the licenses issued and to which category they belong, it is difficult to predict,” he added.

Secretary of State Antony Blinken is scheduled to travel to China next week, the first visit to the country by a member of Biden’s cabinet.

Also Read :  5 reasons 2023 will be a tough year for global markets

The US is also working with allies to reduce pressure on China to develop advanced technology such as semiconductors used in artificial intelligence, nuclear weapons and hypersonic weapons.

Washington last week struck a deal with Japan and the Netherlands to ban companies in those countries from exporting certain chip-making equipment to China. The US in October imposed a ban on American companies exporting semiconductor equipment.

Estevez last year said that the US is looking at several other areas. Asked about reports that the administration is considering restrictions on technology and biotechnology, he told the CNAS think tank: “If I were a betting man, I would lose money.”

A final decision on whether to impose a ban on the export of US chips and technology to China has yet to be made.

The Commerce Department declined to comment but said the agency, along with other government departments, “will continue to review our policies and regulations and engage regularly with stakeholders”.

Huawei did not immediately respond to a request for comment.

Follow up Demetrius Sevastopol on Twitter


Leave a Reply

Your email address will not be published.