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US government ups the ante on Huawei restrictions

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The US government is stepping up its efforts to restrict Chinese telecommunications giant Huawei’s technology.

Yesterday, the Trump administration announced new measures aimed at tightening restrictions on the company, which has been caught up in an escalating trade war between the US and China – the world’s two biggest economies.

The Bureau of Industry and Security (BIS) in the US Department of Commerce yesterday further restricted access by Huawei and its non-US affiliates on the Entity List to items produced domestically and abroad from US technology and software.

BIS also added another 38 Huawei affiliates to the Entity List, which imposes a licence requirement for all items subject to the Export Administration Regulations, and modified four existing Huawei Entity List entries.

The BIS also imposed licence requirements on any transaction involving items subject to commerce export control jurisdiction where a party on the Entity List is involved, such as when Huawei (or other Entity List entities) acts as a purchaser, intermediate, or end-user.

According to the commerce department, these actions, effective immediately, prevent Huawei’s attempts to circumvent US export controls to obtain electronic components developed or produced using US technology.

Semiconductor pinch

This amendment further restricts Huawei from obtaining foreign-made chips developed or produced from US software or technology to the same degree as comparable US chips.

Earlier restrictions announced in May limited companies such as Taiwan Semiconductor Manufacturing Company from manufacturing and supplying Huawei with chips designed by HiSilicon, the Chinese company’s chip subsidiary.

Huawei relies on foreign-made semiconductors to power its 5G telecommunications equipment.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from US software and technology in order to fulfil the policy objectives of the Chinese Communist Party,” says commerce secretary Wilbur Ross.

“As we have restricted its access to US technology, Huawei and its affiliates have worked through third parties to harness US technology in a manner that undermines US national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

The Semiconductor Industry Association (SIA) yesterday issued a statement in response to the latest development.

“We are still reviewing the rule, but these broad restrictions on commercial chip sales will bring significant disruption to the US semiconductor industry,” says John Neuffer, president and CEO of SIA.

“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,” Neuffer says.

The latest restrictions come as the US is lobbying its allies to shun Huawei, which it accuses of posing a “national security” threat because of its alleged close ties to the Chinese government.

However, the Chinese telecommunications giant has denied these accusations.

There have also been questions as to whether US president Donald Trump may have used the US clampdown on Huawei as a bargaining chip in the US-China trade dispute, and to boost his re-election campaign.

After initially giving Huawei a limited role in its 5G infrastructure, the UK government recently gave in to pressure from the US by making a sudden U-turn which completely removes the Chinese company from the country’s 5G network.

Chinese apps purge

The Trump administration has also targeted Chinese apps like WeChat and video-sharing social networking service TikTok as the trade war continues.

On TikTok, Trump and his administration raised national security issues, alleging the Chinese-owned company will share sensitive user data with the Chinese government.

Trump then gave US-based software giant Microsoft a go-ahead in its negotiations with ByteDance, to acquire popular short-video app TikTok – if the deal was completed in six weeks.

Recent reports say enterprise software company Oracle has also entered the race to buy TikTok.

According to Financial Times, Oracle is working with investors in an effort to outbid Microsoft after the Trump divestment order.

Earlier this month, the US government accelerated its efforts to purge Chinese apps and technology companies that it deems untrustworthy.

Chinese e-commerce giant Alibaba is also reportedly under threat from the Trump administration.

Reuters reports that at a news conference on Saturday, when asked if he was considering a ban on other Chinese-owned companies including Alibaba to follow the crackdown on social video app TikTok, Trump said: “Well, we’re looking at other things, yes.”

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