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 to impose a total ban on sales of American technology to the Chinese telecommunications equipment giant.

Several people familiar with discussions within the administration said the Commerce Department has notified some companies that it will no longer grant licenses to any group that exports U.S. technology to Huawei.

The move marks the latest step in Washington’s campaign to clamp down on a Shenzhen-based technology company that US security officials believe is helping China engage in espionage. Huawei denies any involvement in spying.

In 2019, the Trump administration imposed strict restrictions on US technology exports to Huawei by adding the group to a blacklist called the “entity list”. The move was part of a strategy to crack down on Chinese companies that Washington believes pose a risk to US national security.

But the Commerce Department continued to grant export licenses to some companies, including Qualcomm and Intel, to provide Huawei with technology unrelated to high-speed 5G telecom networks.

Over the past two years, President Joe Biden has taken an even tougher stance toward China, especially in the area of ​​cutting-edge technology. In October, it imposed strict restrictions on the supply of advanced semiconductors and chip-making equipment to Chinese groups.

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Alan Estevez, chief of the Commerce Department’s Bureau of Industry and Security, led a China policy review to determine steps the administration should take to make it more difficult for the Chinese military to use US technology for weapons development.

Martijn Rasser, a technology expert at CNAS, a think-tank, said the latest action was “a really significant move”.

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

Washington’s move comes as Huawei’s operations stabilize. Eric Xu, the company’s rotating chairman, said in December that 2023 would be the first year Huawei would return to “business as usual.” According to the company, its revenue in 2022 was 636.9 billion Rmb ($94 billion), after a sharp decline in 2021.

The company has secured its survival by moving into enterprise and government business, particularly in China, and growing its cloud business. The fact that the US still allowed some exports to Huawei also helped prevent a total collapse. Huawei is believed to be backing projects in China aimed at building an import-independent semiconductor supply chain, an effort Washington has also begun to target.

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Industry insiders said it was too early to assess the impact of the latest measures on Huawei. “A full indefinite shutdown would of course be disastrous for Huawei, but the result of anything less than that could be very different,” said a legal expert involved in the export license requests.

An executive at a semiconductor design house that worked with Huawei said the change would come when export licenses expire. “Since there are no details of what permits have been issued and when it is public, it becomes difficult to predict,” the person said.

Paul Triolo, a China technology expert at consultancy Albright Stonebridge, said the Commerce Department is also likely to revoke any previous export licenses granted to Huawei.

“This is going to have a big impact on the revenue of U.S. suppliers for mostly semiconductors,” Triolo said, adding that the department is taking action partly because of concerns about a policy review being led by the Republican-led House of Representatives.

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

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The US is also stepping up efforts with allies to slow China’s push to develop cutting-edge technology such as semiconductors used for artificial intelligence, nuclear weapons modeling and hypersonic weapons development.

Washington last week reached a deal with Japan and the Netherlands to restrict companies in those countries from exporting certain chip-making equipment to China. The US imposed unilateral restrictions in October to prevent American companies from exporting semiconductor manufacturing tools.

Estevez suggested last year that the US was looking at a number of other areas. Asked about reports that the administration is considering restrictions on quantum and biotech, he told the CNAS think tank: “If I were a betting man, I’d put money on it.

An official decision on whether to implement a total ban on the export of chips with US technology to China has not yet been made.

The Commerce Department declined to comment, but said the agency, along with other government departments, will “continually evaluate our policies and regulations and regularly communicate with external stakeholders.”

Huawei did not immediately respond to a request for comment.

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