U.S. Tightening Restrictions on Huawei Access to Technology, Chips​


A Huawei sign is seen outside its store at a shopping complex in Beijing, China July 14, 2020. REUTERS/Tingshu Wang/File Photo

WASHINGTON (Reuters) - The Trump administration on Monday announced it will further tighten restrictions on Huawei Technologies Co, aimed at cracking down on its access to commercially available chips.

The U.S. Commerce Department actions expand restrictions announced in May aimed at preventing the Chinese telecommunications giant from obtaining semiconductors without a special license - including chips made by foreign firms that have been developed or produced with U.S. software or technology.

The administration also added 38 Huawei affiliates in 21 countries to the U.S. government's economic blacklist, the sources said, raising the total to 152 affiliates since Huawei was first added in May 2019.

Commerce Secretary Wilbur Ross told Fox Business the restrictions on Huawei-designed chips imposed in May "led them to do some evasive measures. They were going through third parties," Ross said. "The new rule makes it clear that any use of American software or American fabrication equipment is banned and requires a license."

Secretary of State Mike Pompeo said in a tweet that the U.S. government "dealt a direct blow to Huawei and the repressive Chinese Communist Party by further limiting Huawei’s ability to acquire U.S. technology and compromise the integrity of the world’s networks and Americans’ private information."

Huawei did not immediately comment.

With U.S.-China relations at their worst in decades, Washington is pushing governments around to world to squeeze out  Huawei, arguing it would hand over data to the Chinese government for spying. Huawei denies it spies for China.

In an appearance on Fox on Monday, President Donald Trump accused Huawei, without evidence, of spying on Americans. "We don’t want their equipment in the United States because they spy on us," Trump said.

The new actions, effective immediately, should prevent Huawei’s attempts to circumvent U.S. export controls, Commerce  said.

It "makes clear that we're covering off-the-shelf designs that Huawei may be seeking to purchase from a third-party design house," one Commerce Department official told Reuters.

Commerce Department officials declined to say if they had or would approve any licenses for chipmakers to supply Huawei or if any applications were pending.

The Semiconductor Industry Association, however, said that "these broad restrictions on commercial chip sales will bring significant disruption to the U.S. semiconductor industry. 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 U.S. companies."

A new separate rule requires companies on the economic blacklist to obtain a license when a company on the list, like Huawei, acts "as a purchaser, intermediate consignee, ultimate consignee, or end user."

The department also confirmed it will not extend a temporary general license that expired Friday for users of Huawei devices and telecommunication providers. Parties must now submit license applications for transactions previously authorized.

The department said it was allowing the temporary general license to expire covering support to existing "personal consumer electronic devices."

The Commerce Department also adopted a limited permanent authorization for Huawei entities to allow "ongoing security research critical to maintaining the integrity and reliability of existing" networks and equipment.

Existing U.S. restrictions have had a heavy impact on Huawei and its suppliers. The restrictions announced in May do not fully take effect until Sept. 14.

On Aug. 8, financial magazine Caixin reported Huawei will stop making its flagship Kirin chipsets next month due to U.S. pressure on suppliers.

Huawei’s HiSilicon division has relied on software from U.S. companies such as Cadence Design Systems Inc <CDNS.O> and Synopsys Inc <SNPS.O> to design its chips. It outsourced the production to Taiwan Semiconductor Manufacturing Co (TSMC) <2330.TW>, which uses equipment from U.S. companies.

TSMC has said it will not ship wafers to Huawei after Sept. 15.

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