Washington suspends export permits for US businesses to Huawei

As it gets closer to outlawing the sale of American technology to the Chinese telecom equipment giant, the Biden administration has ceased granting US corporations export licenses to Huawei.

According to a number of sources familiar with the administration's deliberations, the Commerce Department informed some businesses that it would no longer issue licenses to any organization exporting American technology to Huawei.

The action is the latest in Washington's campaign to rein in the Shenzhen-based tech firm, which US security officials contend is assisting China in its espionage activities. Any role in spying is denied by Huawei.

In 2019, the Trump administration imposed tight limitations on the export of American technology to Huawei by placing the company to a "entity list" blacklist. The action was a component of a plan to punish Chinese businesses that Washington deemed to be a threat to US national security.

But the department of commerce nonetheless allowed some businesses, such as Qualcomm and Intel, to transfer technology to Huawei that had nothing to do with super-fast 5G telecom networks.

President Joe Biden has taken a more aggressive approach toward China during the past two years, notably in the field of cutting-edge technology. He imposed broad limitations on the supply of cutting-edge semiconductors and chip manufacturing machinery to Chinese organizations in October.

In order to assess what steps the administration should take to make it more difficult for the Chinese military to exploit US technology to manufacture weapons, Alan Estevez, the bureau of industry and security's director in the commerce department, has been heading a review of China-related policy.

Technology specialist Martijn Rasser of the think group CNAS called the most recent action a "really significant move."

Rasser, a former CIA official, said that Huawei's development into industries including undersea cables and cloud computing was a contributing factor in the commerce department's measures. "Huawei as a company is a very different animal than it was four years ago when it was focused on 5G," Rasser said.

The action by Washington comes as Huawei's operations have begun to stabilize. The company's rotating chair, Eric Xu, stated in December that 2023 would be the first year that "business as usual" will resume at Huawei. After a sharp fall in 2021, the business reports that its 2022 revenues were flat at Rmb636.9 billion ($94 billion).

With a change to enterprise and government business, particularly in China, and its expanding cloud business, the company was able to ensure its survival. Another factor that prevented a total collapse was the US's continued permission for some exports to Huawei. Huawei is said to be supporting Chinese initiatives that attempt to create an import-independent semiconductor supply chain, which Washington has started to target.

Industry experts claimed that it was still too early to judge how the most recent actions will affect Huawei. According to a legal expert involved in export license applications, "a blanket stop indefinitely would of course be catastrophic for Huawei, but the result of anything short of that could be quite different."

Change would occur when export permits expired, according to a senior executive at a semiconductor design firm that has collaborated with Huawei. "Since no detail regarding which licences were granted and when is public, that becomes hard to predict," they said.

The commerce department was also expected to cancel all prior export licenses issued to Huawei, according to Paul Triolo, a China tech analyst with the Albright Stonebridge firm.

Triolo stated that the department was acting in part due to anxiety over a legislative examination of its rules by the Republican-led House of Representatives. "This will have major impact on US supplier revenue for mostly commodity semiconductors," she added.

The first trip to China by a member of Biden's cabinet will be made by Secretary of State Antony Blinken next week.

Along with other partners, the US is ratcheting up its attempts to halt China's drive to create cutting-edge technologies, including semiconductors used in artificial intelligence, nuclear bomb modeling, and the creation of hypersonic weapons.

Washington and Japan and the Netherlands last week came to an agreement to prevent corporations in those nations from selling specific chipmaking equipment to China. In an effort to prevent American businesses from exporting equipment for making semiconductors, the US unilaterally placed restrictions in October.

Last year, Estevez said the US was considering a number of additional places. "If I was a betting person, I would put down money on that," he said when the CNAS think-tank asked him about rumors that the administration was mulling limitations on quantum and biotechnology.

It has not yet been formally decided whether to enact a complete export restriction of chips made with US technology to China.

The department of commerce declined to comment, but stated that it will "continually assess our policies and regulations and communicate regularly with external stakeholders" in addition to other government departments.

A request for response from Huawei was not immediately complied with.

By fLEXI tEAM