From limiting sales to a complete ban — the US is set to cripple Huawei further
After four years of punishing restrictions from the US, Huawei declared it is “business as usual” in December 2022. “In 2022, we successfully pulled ourselves out of crisis mode. US restrictions are now our new normal,” Huawei’s rotating chair Eric Xu said in an annual new year message to employees. At that point, Huawei faced the perils of going through countless red tape if it wanted to purchase components from American companies.
The tightened controls imposed by the Biden administration forced companies supplying US technology to the Chinese group to seek an additional license from regulators, limiting Huawei’s ability to produce cutting-edge smartphones. That export control, announced last October, grew from just being added to Washington’s trade blacklist in 2019.
Initially, the move was part of a strategy to crack down on Chinese companies that Washington believed posed a risk to American national security. That, however, slowly progressed to crippling China’s dominance in the global technology arena. The upside, until recently at least, was that the commerce department continued to grant export licenses for some companies, including Qualcomm and Intel, to provide Huawei with technology unrelated to high-speed 5G telecom networks.
But since President Joe Biden took office two years ago, it has became more and more apparent that his administration has taken an even tougher stance on China, particularly in the area of cutting-edge technology. Huawei rapidly lost both its global and domestic market share of consumer electronics. By last year, it had run out of advanced in-house designed chips, according to research company Counterpoint.
And while many would have guessed that the situation couldn’t get any worse for Huawei, the US has just proven otherwise. The latest update is that the Biden administration plans to go all out on its restriction on Huawei. That means cutting off the Chinese company from all its American suppliers, including Intel Corp. and Qualcomm Inc.
“Sales from US firms to Huawei have been limited for four years since former President Donald Trump added the Shenzhen, China-based company to the so-called US “entity list” out of national security concerns. US suppliers have since required government approval to sell to the telecom equipment giant,” a report by Bloomberg stated.
Call for a complete ban on Huawei in the US
As the administration is debating whether and how to adjust its licensing policy, according to people familiar with the matter, some officials have been advocating for the complete ban of all sales to Huawei. As much as tensions with China have been rising throughout Biden’s presidency, he has also been under growing pressure from Republicans controlling the House to continue squeezing Beijing, particularly to limit the country’s technological advances.
In the US’ relentless effort to stifle China’s rise, the Biden administration persuaded the Netherlands and Japan last week to join the US in restricting exports of advanced semiconductor manufacturing machinery to China. Despite the fact that Trump’s ban on the sale of certain items wiped out vast amounts of revenue for US suppliers, Biden’s administration continues its pursuit against Huawei and China at large.
For context, Huawei was once one of the world’s largest buyers of electronic components and a hugely important part of the supply chain because of its position in the handset and networking equipment industries. “Under the new policy some officials advocate, all license requests to supply the company would be denied. Meanwhile, most current applications for new licenses are languishing in a stalled approval process, the people said, creating a de facto halt,” according to Bloomberg.
It is also highly likely that Huawei has been stockpiling foreign components such as chips and sourcing or researching alternatives to American circuitry.
Huawei relies on the Intel, and Advanced Micro Devices Inc. (AMD) – both US manufacturers – to provide it with the processors it uses in its Mate range of laptops. At the same time, Qualcomm sells Huawei the processors and modems that are the core components of its diminished range of smartphones.
22 September 2023
22 September 2023
21 September 2023