What you need to know
- New U.S restrictions on Huawei prevent the company from buying chips from U.S. linked companies, whether done through intermediaries or not.
- Any company interested in trading with Huawei would need a special license.
- The U.S. argued that Huawei had tried to evade the prior version of the ban continuously.
The U.S government is imposing new trading restrictions on Huawei, preventing the company from buying chips from U.S. affiliated companies even done through a third-party intermediary.
On Monday, Reuters broke the news, reporting:
Commerce Secretary Wilbur Ross told Fox Business the restrictions on Huawei-designed chips imposed in May "led them to do some evasive measures. They were going through third parties," Ross said. "The new rule makes it clear that any use of American software or American fabrication equipment is banned and requires a license."
Secretary of State Mike Pompeo said the rule change "will prevent Huawei from circumventing U.S. law through alternative chip production and provision of off-the-shelf chips." He added in a statement "Huawei has continuously tried to evade" U.S. restrictions imposed in May. The new actions, effective immediately, should prevent Huawei's attempts to circumvent U.S. export controls, Commerce said.
It "makes clear that we're covering off-the-shelf designs that Huawei may be seeking to purchase from a third-party design house," one Commerce Department official told Reuters.
Earlier this year, Huawei had argued that it would be able to weather a storm from the U.S. with little impact. Speaking at Davos, founder Ren Zhengfei said:
This year the U.S. might further escalate their campaign against Huawei, but I feel the impact on Huawei's business would not be very significant. This year in 2020, since we already gained experience from last year and we got a stronger team, I think we are more confident that we can survive even further attack.
With the company's HiSilicon now effectively defunct and a claimed revenue gap of billions in dollars from the loss of Google Play Services, it seems that the impact of the U.S. was a bit more significant than anticipated.