US Turned Heavy on Huawei by Expanding the May Restrictions

Partly as a result of increasing differences and conflict between Washington and Beijing, the Trump administration on Monday, August 17, 2020, slapped the Chinese tech giant, Huawei Technologies Co. (Huawei) at a heavy price. The administration has decided to make the existing restrictions on Huawei tougher and banned the company from access to chips and technologies that are connected with American suppliers or manufacturers.

Expansion of the May Restrictions

The US blacklisted the Chinese telecom giant in its government’s economist list for the first time in May 2019. After a year, the Trump administration started imposing several restrictions against the company and as a result, the company was banned from access to semiconductors and chips made by companies including foreign firms that have been using US software or technology. Keeping a view to a complete crackdown of Huawei, Washington also announced on Monday that it has decided to add 36 additional Huawei affiliates across 21 countries to the US government’s economic blacklist, which would raise the total number to 152 affiliates.

As Reuter reported, US Commerce Secretary Wilbur Ross explained that the May restrictions on Huawei had “led them to do some evasive measures. They were going through third parties.” However, Ross emphasized reflecting the US latest decision, “The new rule makes it clear that any use of American software or American fabrication equipment is banned and requires a license.” Similarly, Secretary of State Mike Pompeo said the new decision “will prevent Huawei from circumventing US law through alternative chip production and provision of off-the-shelf chips” by stressing that the Chinese company had constantly tried to evade US restrictions imposed in May.

US-China Trade War and Conflicts

Since the US-China conflict has further escalated over the recent months, Washington mainly targeted to punish Huawei harder as the US had argued that the company worked for the Chinese government by supplying security-related information. Trump administration has been in talk with several governments across the globe to take a similar step against the company despite the fact that Huawei denied spying for Chinese authorities.

With this new development, an official in the Commerce Dept. told Reuters that the new decision would stop Huawei’s attempts to circumvent US export controls and make it difficult to purchase chips even from a third-party. To make it tougher, the department has also announced that it would not renew a temporary general license that expired Friday for users of Huawei devices and telecommunication providers. According to the new policy of the Dept., parties associated with the company had to submit license applications before September 14.

As per a report by a financial magazine, Caixin, on August 8, Huawei would stop manufacturing its important chipsets from the next month. Since the US pressure has a big impact on the suppliers, many companies had decided to stop supplying chips to Huawei. For instance, Taiwan Semiconductor Manufacturing Co., which uses equipment from US companies, has announced that it would stop shipping wafers to Huawei after September 15.