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 the sale of American technology to the Chinese telecommunications giant.

Several people familiar with discussions inside the administration said the Commerce Department had told some companies it would no longer grant licenses to any group exporting U.S. technology to Huawei.

The move marks the latest point 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 espionage.

In 2019, the Trump administration imposed severe 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 believed posed a risk to US national security.

However, 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 telecommunications networks.

Over the past two years, President Joe Biden has taken an even tougher stance on China, especially in high-tech. In October, it imposed sweeping restrictions on the supply of advanced semiconductors and chip-making equipment to Chinese groups.

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

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

“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,” said Rasser, the former CIA official, referring to its expansion into areas such as undersea cables and cloud computing.

Washington’s move comes as Huawei’s operations have stabilized. Eric Xu, the company’s rotating chair, 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 flat at Rmb636.9 billion ($94 billion), after a steep decline in 2021.

The company has ensured its survival by moving into enterprise and government business, especially in China, and growing cloud business. The fact that the US still allowed some Huawei exports also helped avert a complete collapse. Huawei is believed to be supporting projects in China aimed at building an independent semiconductor supply chain based on imports, which Washington has also begun to focus on.

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Industry experts said it was too early to assess the impact of the latest measures on Huawei. “An indefinite blanket shutdown would obviously be disastrous for Huawei, but the outcome of anything less could be quite different,” said a legal expert involved in the export license applications.

An executive at a semiconductor design firm that has worked with Huawei said the change will occur when export licenses expire. “Since no details are public about what licenses have been granted and when, it is difficult to predict,” the person said.

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

“This is going to have a big impact on the revenue of U.S. suppliers, mostly from commodity semiconductors,” Triolo said, adding that the department is taking action in part because of concerns that the Republican-led House of Representatives will review its policy in Congress.

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

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The U.S. is also stepping up efforts with allies to slow China’s push to develop high-tech technologies such as semiconductors that are used for artificial intelligence, nuclear weapons modeling and hypersonic weapons development.

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

Estevez indicated last year that the U.S. is pursuing a number of other areas. Asked about reports that the administration is considering curbs on quantum and biotech, he told the CNAS think tank: “If I was a betting man, I’d put money on it.”

A formal decision on whether to introduce a complete ban on the export of chips with American technology to China has not yet been made.

The Commerce Department declined to comment, but said the agency, along with other government departments, would “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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