Trump Administration Moves to Cut Huawei Off from Chip Suppliers

The Trump administration reportedly moved to block shipments of semiconductors to China’s Huawei Technology from global chipmakers on Friday as tensions with the communist country ramp up. The Commerce Department says that its announcement “cuts off Huawei’s efforts to undermine U.S. export controls.”

Reuters reports that the Trump administration moved this week to block shipments of semiconductors to Huawei Technologies from global chipmakers in a move that could increase tension between the U.S. and China. The U.S. Commerce Department stated that it was amending an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”

China reacted to the news swiftly, stating that it was ready to put U.S. companies on an “unreliable entity list,” in response to the new limits on Huawei, according to China’s state-run Global Times. These measures would include launching investigations and imposing restrictions on U.S. companies such s Apple, Cisco Systems, Qualcomm, as well as suspending the purchase of Boeing Co. airplanes, the report stated citing a source.

The U.S. Commerce Department stated that its “announcement cuts off Huawei’s efforts to undermine U.S. export controls.” Secretary of Commerce Wilbur Ross commented:

Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort. However, that effort is still dependent on U.S. technologies.

This is not how a responsible global corporate citizen behaves. We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests.

The rule change is a blow to both Huawei and Taiwanese firm Taiwan Semiconductor Manufacturing Co Ltd. which announced late on Thursday that it would be building a $12 billion chip factory in Arizona.

TSMC said Friday it is “working with outside counsels to conduct legal analysis and ensure a comprehensive examination and interpretation of these rules. We expect to have the assessment concluded before the effective date,” the company said, adding the “semiconductor industry supply chain is extremely complex, and is served by a broad collection of international suppliers.

Secretary of State Mike Pompeo commented on the construction of the new Arizona plant stated: “TSMC’s announcement comes at a critical juncture, when China is competing to dominate cutting-edge technology and control critical industries. The TSMC facility in Arizona will increase U.S. economic independence.”

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