WASHINGTON (Reuters) – The Trump administration on Friday moved to obstruct deliveries of semiconductors to Huawei Technologies from worldwide chipmakers, in an action that could ramp up tensions with China.
FILE PHOTO: The Huawei logo design is seen on a communications gadget in London, Britain, January 28,2020 REUTERS/Toby Melville
The U.S. Commerce Department said it was changing an export guideline to “tactically target Huawei’s acquisition of semiconductors that are the direct item of particular U.S. software application and technology.”
The department added the “announcement cuts off Huawei’s efforts to weaken U.S. export controls.”
The guideline change is a blow to Huawei, the world’s no. 2 mobile phone maker, along with to Taiwan’s TSMC (2330 TW), a major manufacturer of chips for Huawei’s HiSilicon system in addition to cellphone rivals Apple Inc ( AAPL.O) and Qualcomm Inc ( QCOM.O).
Huawei, which needs semiconductors for its widely utilized smartphones and telecoms devices, is at the heart of a battle for global technological dominance in between the United States and China.
The United States is trying to convince allies to exclude Huawei gear from next generation 5G networks on premises its equipment might be utilized by China for spying. Huawei has consistently denied the claim.
Huawei has actually continued to use U.S. software application and technology to design semiconductors, the Commerce Department said, in spite of being positioned on a U.S. economic blacklist in May2019
Under the rule modification, foreign business that use U.S. chipmaking devices will be required to acquire a U.S. license prior to supplying certain chips to Huawei, or an affiliate like HiSilicon.
In order for Huawei to continue to get some chipsets or utilize some semiconductor creates tied to particular U.S. software and technology, it would need to receive licenses from the Commerce Department.
NATIONAL SECURITY CONCERNS
The rule change is to “avoid U.S. innovations from making it possible for malign activities contrary to U.S. national security and diplomacy interests,” Commerce Secretary Wilbur Ross stated in a declaration, adding Huawei and its affiliates “have stepped-up efforts to undermine these nationwide security-based limitations.”
The Commerce Department stated the rule will enable wafers currently in production to be shipped to Huawei as long as the shipments are complete within 120 days from Friday. Chipsets would need to be in production by Friday or they are ineligible under the rule.
The United States put Huawei and 114 affiliates on its economic blacklist pointing out nationwide security issues. That required some U.S. and foreign companies to look for special licenses from the Commerce Department to offer to it, but China hawks in the U.S. federal government have been irritated by the large variety of supply chains beyond their reach.
Separately, the Commerce Department extended a temporary license that was set to expire Friday to enable U.S. business, numerous of which operate wireless networks in rural America, to continue working with Huawei through Aug.13 It cautioned it anticipated this would be the final extension.
Reuters first reported the administration was thinking about modifications to the Foreign Direct Product Rule, which subjects some foreign-made items based upon U.S. technology or software to U.S. guidelines, in November.
Many chip producers count on devices produced by U.S. business like KLA ( KLAC.O), Lam Research ( LRCX.O) and Applied Materials ( AMAT.O), according to a report last year from China’s Everbright Securities.
The Trump administration has taken a series of actions aimed at Chinese telecom companies in current weeks.
The U.S. Federal Communications Commission (FCC) last month began the procedure of closing down the U.S. operations of three state-controlled Chinese telecom business, pointing out nationwide security threats. The FCC also in April approved Alphabet Inc system Google’s ( GOOGL.O) request to use part of an 8,000- mile undersea telecoms cable television between the United States and Taiwan, however not Hong Kong after U.S. firms raised national security issues.
This week, President Donald Trump extended for another year a May 2019 executive order barring U.S. business from utilizing telecom equipment made by companies deemed to posture a national security danger, a relocation seen intended at Huawei and peer ZTE Corp.
Reporting by David Shepardson; Editing by Lincoln Feast.