The Trump administration is tightening its restrictions on Chinese telecoms giant Huawei, something that will further hurt its business in the US and the world at large. The new restrictions mean that Huawei will have a hard time accessing US-made chips for its devices.
There was a temporary general license in place that allowed the company to access some of this technology. Although it was widely believed that this license would be extended once it expired, the Trump administration has decided not to.
As a result, some Huawei devices won’t be able to get any Android updates from Google. However, the Commerce Department noted that it will allow all Huawei devices built before May 16th, 2019 to get Android updates.
The US government also noted that it will permit the continued use of Huawei network devices that are critical in the operation of telecommunication companies in the US. However, these telecom companies will need to apply for licenses to that effect from the US Department of Commerce.
A statement released by commerce secretary Wilbur Ross noted that, even though the US had done well to restrict Huawei’s access to US technology in recent months, the Chinese company had been violating sanctions using third-party companies, something that according to Burr undermines US national security and foreign policy interests. It’s based on this that the Trump administration thinks that it’s time to tighten restrictions even further.
This spat between the US government and Huawei started back in May 2019 when the White House placed the Chinese company and 114 of its affiliates under the Entity List. This meant that US companies were no longer allowed to sell technology to the company unless they get authorization from the government. The order was issued under the guise of national security but was all part of the trade war between the Trump administration and China.
The crisis escalated further in May this year when the US Commerce Department amended the rule, blocking any shipments of semiconductors to Huawei.
The rule even prevented foreign semiconductor manufacturers that use US technology from selling to the Chinese company. The US Commerce Department is now adding 38 more Huawei affiliates to its blacklist, bringing the total number of companies in the list to 152.
Just last month, the Chinese telecoms giant said that it was running out of processor chips, adding that it will no longer be able to make its Kirin chipsets by September this year due to the ongoing economic sanctions. Huawei is the number one smartphone seller in the world by volume.
Its business is very important to most US companies. In fact, there has been a lot of lobbying from US chipmakers like Qualcomm for the White House to ease restrictions.
But so far, the President has remained steadfast in his plan, something that will in the long run hurt US companies significantly. The move also comes during an election year that could have massive implications on the future of US-China relations.