U.S. tightens restrictions on Huawei yet again, underscoring the difficulty of closing trade routes

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WASHINGTON – The Trump administration on Monday Aug. 17, 2020, took more steps to try to block Huawei’s access to semiconductors in another sign of the complexity of severing the Chinese technology company from global supply chains.

The Commerce Department originally banned the export of U.S. technology to Huawei in May 2019, calling the Chinese company a security threat. But it’s had to tighten the rules several times since then as Huawei has found ways to continue buying components made with U.S. technology.

In May of this year, Commerce amended the rules to say that overseas manufacturers of semiconductors, if they use U.S. equipment or technology to produce chips according to Huawei designs, would need a license from the United States before selling them to the Chinese company.

Now the department will require such manufacturers to get a license even if they are selling chips not designed by Huawei but intended for Huawei’s use, according to a Commerce official who spoke on the condition of anonymity to discuss sensitive matters.

The Commerce official declined to say how many licenses the agency anticipates issuing. Huawei didn’t immediately respond to a request for comment.

“This kills Huawei,” said one industry executive, speaking on condition of anonymity because he wasn’t authorized to speak to reporters. “Any chip made anywhere in the world by anyone is subject to this.”

Every chip in the world in practice contains U.S. technology of software, the executive said.

The Commerce Department said the action would “prevent Huawei’s attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology.”

The agency also added 38 new Huawei entities to the trade blacklist, including many of Huawei’s cloud-computing subsidiaries around the world. Any company selling U.S. technology to those subsidiaries will now need a license from the Commerce Department.

Secretary of State Mike Pompeo also characterized the new rules as attempting to close loopholes, saying Huawei had “continuously tried to evade” the blacklisting.

The new rules “will prevent Huawei from circumventing U.S. law through alternative chip production and provision of off-the-shelf chips produced with tools acquired from the United States,” Pompeo said in a statement Monday.