Huawei Suppliers Given 90 Day Respite by U.S.

Article By : Dylan McGrath

Temporary license grants suppliers ability to continue selling to Huawei through August 20.

The U.S. Commerce Dept. has given suppliers of chips and components to Huawei Technologies a 90-day reprieve in the form of a temporary license that will enable them to keep selling parts to Huawei through Aug. 20.

The Bureau of Industry and Security (BIS) has granted suppliers a temporary general license to continue selling to Huawei for 90 days, subject to certain conditions.

The BIS ruling follows the Commerce Dept. decision announced last week to place Huawei and 68 of its international subsidiaries on an export control list that restricts the ability of U.S. firms to supply most tech-related items. Placement of Huawei on the so-called Entity List would likely all but halt its ability to buy chips and other components from U.S. suppliers.

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U.S. Commerce Secretary Wilbur Ross said in a statement that the license would give operators time to make other arrangements the Commerce Dept. considers "the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services."

The Commerce Dept. said it added Huawei to the Entity List after concluding that the company is engaged in activities that are contrary to U.S. national security or foreign policy interests, including alleged violations of the International Emergency Economic Powers Act (IEEPA) by providing prohibited financial services to Iran. The department also concluded that Huawei engaged in obstruction of justice in connection with the investigation of alleged violations of U.S. sanctions.

The Semiconductor Industry Association trade group applauded the decision to grant a 90-day temporary general license to U.S. suppliers to continue supplying Huawei.

“We hope to work with the Administration to broaden the scope of the license so it advances U.S. security goals in a manner that does not undermine the ability of the U.S. semiconductor industry to compete globally and ensures the economic security of an industry that is the backbone of this country's technology leadership in key areas such as AI, quantum computing, and next-generation telecommunications," said John Neuffer, SIA president and CEO, in a statement.

David Wong, a managing director and equity research analyst at Instinet, said in a report circulated Monday that the designation represents a risk to U.S. chip suppliers that supply Huawei. According to Instinet estimates, Huawei holds about 29% of the global wireless equipment market, 25% of the optical equipment market, 24% of the router market and about 14% of the smartphone market.

Wong said the long-term effects of adding Huawei to the export control list may be more severe, noting that the U.S. also banned the sale of chips and components to ZTE for a period last summer.

"Given two major U.S. actions against large electronics companies in the last two years, we are concerned that international electronics manufacturers might begin to take into account the recent history of disruption of supply from U.S. chip companies when making future decisions about electronic components for use in their systems," Wong said in the report.

"This could put U.S. chip companies at a competitive disadvantage in chip segments where there are already strong competitors from other countries, and create an added incentive for foreign competitors to attempt to enter chip segments which have historically been the strongholds of U.S. companies," Wong said.

According to a report released Monday by the Information Technology & Innovation Foundation, a nonpartisan think tank, export controls under consideration by the Commerce Dept. on emerging technologies could result in a loss to U.S. firms of $14.1 billion to $56.3 billion in export sales over five years. The controls could also threaten 18,000 to 74,000 U.S. jobs, according to the report.

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