The US government is looking to cut-off Huawei’s chip manufacturing business

They say that success attracts attention and in the case of Chinese tech giant Huawei, it has unfortunately brought all the wrong sort of interest as the US government continues with its crackdown on the company. It has seen the company prevented from working with US companies with many of its smartphones no longer allowed to use Google’s Android ecosystem and at one time even saw its laptops blocked from sale in the US. Now a new report from the Wall Street Journal is revealing new measures to block the company’s semiconductor business.

According to the report, a newly amended export rule has been proposed to block shipments of semiconductors to Huawei to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain US software and technology,”. The rule prevents foreign manufacturers of semiconductors who use American software and technology in their operations from shipping their products to Huawei unless they get a license from the US, something which drastically impacts on the HiSilicon unit which manufactures processors. The rule will allow chips currently in production to be shipped to Huawei, provided the shipment is completed within 120 days from today.

While the US government has continued to extend various bans against the company as a result of its wide usage in wireless networks across the country, it appears the country is once again placing focus on security concerns around their technology, with Secretary of Commerce Wilbur Ross, releasing the following statement:

Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort .We must amend our rules exploited by Huawei and HiSilicon and prevent US technologies from enabling malign activities contrary to US national security and foreign policy interests.

No evidence of these security concerns has yet to be revealed, with the UK recently signing with Huawei to help supply equipment for its own 5G network. So far Huawei has been doing its best to tackle these issues head-on, with its own smartphone eco-system and development of its own operating system HarmonyOS and own mapping service to remove reliance on Google in the smartphone game.

Hitting its semiconductor business though is arguably a bigger play which could affect the company even more and while Huawei may continue to find favour in the majority of global markets, this could impact on them considerably and it will be interesting to see how they will be able to alter or change strategies to withstand this.

Last Updated: May 18, 2020