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Tuesday, May 21, 2019

Huawei allowed to do business with U.S. tech firms…for now

Huawei hasn’t had the best weekend so far. News broke that the U.S. government placed Huawei on the entity list which resulted in them losing access to Google’s services and hardware components until further notice. Today though, it looks like the situation is improving for the Chinese tech giant as the U.S. government has temporarily eased the trade restrictions imposed on the company.

Reuters reports that this move is “aimed at minimising disruption for its customers”, and that the U.S. Commerce Department will allow Huawei Technologies to “purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.”

However, Huawei are still prohibited from buying American parts and components to manufacture new products without licence approvals, which Reuters reports that will likely be denied.

According to U.S. Secretary of Commerce Wilbur Ross, the new authorisation is also intended to give telecommunications operators that rely on Huawei equipment, time to make other arrangements. Ross added that the license, which is in effect until August 19, will also allow operations to continue for existing Huawei mobile phone users and rural broadband networks.

Huawei’s founder Ren Zhengfei dismissed this move, saying that the temporary repreive borke little meaning for the company, and that the tech firm was already prepared for U.S. action. Earlier reports indicate that the company has already been stockpiling critical components, enough to last for at least three months. Those reports also indicate that the company has been fast-tracking the development of their own chips, modems and processors to help with the situation.
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“The U.S. government’s actions at the moment underestimate our capabilities,” said Ren in an interview with CCTV, according to a transcript published by the broadcaster. Ren says that Huawei is capable of making the chips it buys from the U.S. though that does not mean it will stop buying american chips.
A reality check

Washington trade lawyer Douglas Jacobson says that he thinks this is a reality check. He added that this shows just how pervasive Huawei’s products and technology are around the world, and the kind of impact a U.S. restriction would have.

Meanwhile, president of the Semiconductor Industry Association John Neuffer said in a statement that the association wants the U.S. government to ease the restrictions further, adding that they hoped to work with the administration to broaden the licence’s scope so that it would advance the U.S.’s security goals without undermining the industry’s ability to compete globally.

The Semiconductor Industry Association represents U.S. chipmakers and designers.

Last year, of the USD70 billion that Huawei spent on buying components, USD11 billion of that went to American firms like Qualcomm, Intel and Micron Technology. Because of this, reports indicate that stringent export controls on technologies could cause U.S. firms to lose up to USD56.3 billion in export sales over five years. This could also threaten as many as 74,000 jobs.

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