US mulls cutting off Huawei from suppliers
Sales to Chinese firm restricted since 2019
The Biden administration is considering cutting off Huawei Technologies Co from all of its American suppliers, including Intel Corp and Qualcomm Inc, as the US government intensifies a crackdown on the Chinese technology sector.
Sales from US firms to Huawei have been limited for four years, since former President Donald Trump added the Shenzhen, China-based company to the so-called US “entity list” out of national security concerns. US suppliers have since required government approval to sell to the telecom equipment giant.
Now, some officials in the Biden administration are advocating for banning all sales to Huawei — long suspected of ties to the Beijing government and Chinese military — as the administration debates whether and how to adjust its licensing policy, according to people familiar with the matter.
The people asked not to be identified because a decision hasn’t been made.
Tensions with China have been rising throughout Joe Biden’s presidency, and he’s under pressure from Republicans controlling the House to continue squeezing Beijing, particularly to limit the country’s technological advances. Last week, the Biden administration persuaded the Netherlands and Japan to join with the US in restricting exports of advanced semiconductor manufacturing machinery to China.
Huawei was once one of the world’s largest buyers of electronic components and a hugely important part of the supply chain because of its position in the handset and networking equipment industries. Trump’s ban on certain sales crippled the Chinese company, while wiping out huge amounts of revenue for US suppliers such as Broadcom Inc.
But the Commerce Department continued to allow some other products to be supplied to Huawei. The company
remains a $100 billion behemoth that’s spearheading the expansion of the world’s largest 5G network at home, while aiding construction of critical
broadband from Africa to the Middle East. In December, the firm declared it was “business as usual” after successfully weathering US tech sanctions.
STALLED APPLICATIONS
Under the new policy some officials advocate, all licence requests to supply the company would be denied. Meanwhile, most current applications for new licences are languishing in a stalled approval process, the people said, creating a de facto halt.
The longer-term impact on Huawei from that action is uncertain. It still derives enormous revenue from local wireless carriers such as China Mobile Ltd and state enterprises that rely on Huawei to build local-level and corporate networks. China operates more than 2 million 5G base stations, or more than 60% of the world’s total, according to industry officials.
Huawei’s also been stockpiling foreign components such as chips and sourcing or researching alternatives to American circuitry. Representatives for the company didn’t immediately respond to requests for comment.
Intel and Advanced Micro Devices Inc provide Huawei with processors it uses in its Mate range of laptops, while Qualcomm sells Huawei processors and modems that are the core components of its diminished range of smartphones.
Spokespeople for the National Security Council and the Commerce Department didn’t immediately respond to requests for comment. Representatives for Intel, Qualcomm and AMD declined to comment.
It’s not clear how soon the administration may act on a policy change, the people familiar with the matter said. They cautioned that discussions are at an early stage, and some of them said timing for a decision could coincide with the four-year anniversary of Huawei’s addition to the entity list in May.
Shutting off sales to Huawei wouldn’t be as devastating for US companies as it once was. The Chinese company has spun off a large chunk of its smartphone business, mostly offers only lowerbandwidth 4G phones under its own name and has seen its brand damaged by the US campaign against it.
Underlining the decline in its importance, Huawei represents less than one percent of revenue for Qualcomm, Intel and AMD, according to Bloomberg supply chain analysis.