White House moves closer to imposing total ban on sale of American tech to Chinese group
The move marks the latest prong in Washington’s campaign against the Chinese tech company, which national security officials believe helps Beijing engage in espionage © Angel Garcia/Bloomberg
Demetri
Sevastopulo in Washington and Kathrin Hille in Taipei
January 31, 2023
The Biden administration has stopped providing US companies
with licences to export to Huawei as it moves towards imposing a total ban on
the sale of American technology to the Chinese telecom equipment giant.
Several people familiar with discussions inside the
administration said the commerce department had notified some companies that it
would no longer grant licences to any group exporting American technology to
Huawei.
The move marks the latest prong in Washington’s campaign to curb
the Shenzhen-based tech company, which US security officials believe helps
China engage in espionage. Huawei denies any involvement in spying.
The Trump administration in 2019 imposed tough restrictions
on exporting American technology to Huawei by adding the group to a blacklist
called the “entity list”. The move was part of a strategy to crack down on
Chinese companies that Washington believed posed a risk to US national
security.
But the commerce department continued to grant export
licences for some companies, including Qualcomm and Intel, to provide Huawei
with technology that was not related to high-speed 5G telecom networks.
Over the past two years, President Joe Biden has taken an
even tougher stance on China, particularly in the area of cutting-edge
technology. In October, he imposed sweeping restrictions on providing advanced
semiconductors and chipmaking equipment to Chinese groups.
Alan Estevez, head of the commerce department’s bureau of
industry and security, has been leading a review of China-related policy to
determine steps the administration should take to make it harder for the
Chinese military to use US technology to develop weapons.
Martijn Rasser, a technology expert at CNAS, a think-tank,
said the latest action was a “really significant move”.
“The actions by the commerce department are partly driven by
the fact that Huawei as a company is a very different animal than it was four
years ago when it was focused on 5G,” said Rasser, a former CIA official,
referring to its expansion into areas such as undersea cables and cloud
computing.
Washington’s move comes as Huawei’s operations have
stabilised. Eric Xu, the company’s rotating chair, said in December that 2023
would be the first year in which Huawei would return to “business as usual”.
According to the company, its 2022 revenues were flat at Rmb636.9bn ($94bn),
after a precipitous decline in 2021.
The company secured its survival with a shift to enterprise
and government business, especially in China, and its growing cloud business.
The fact the US still allowed some exports to Huawei also helped avert a
complete collapse. Huawei is believed to be backing projects in China aimed at
building an import-independent semiconductor supply chain, efforts which
Washington has also begun to target.
Industry insiders said it was too early to assess the impact
of the latest measures on Huawei. “A blanket stop indefinitely would of course
be catastrophic for Huawei, but the result of anything short of that could be
quite different,” said a legal expert involved in export licence applications.
An executive at a semiconductor design house that has worked
with Huawei said change would come when export licences expired. “Since no
detail regarding which licences were granted and when is public, that becomes
hard to predict,” the person said.
Paul Triolo, a China tech expert at the Albright Stonebridge
consultancy said the commerce department was also likely to revoke all previous
licenses granted for exports to Huawei.
“This will have major impact on US supplier revenue for
mostly commodity semiconductors,” said Triolo, adding that the department was
taking action partly over concern about a congressional review of its policies
by the Republican-led House of Representatives.
Secretary of state Antony Blinken is preparing to travel
next week to China, the first visit to the country by a member of Biden’s
cabinet.
The US is also stepping up efforts with allies to slow
China’s push to develop cutting-edge technology such as semiconductors that are
used for artificial intelligence, nuclear weapons modelling and the development
of hypersonic weapons.
Washington last week reached a deal with Japan and the Netherlands to restrict companies in those countries from exporting certain chipmaking equipment to China. The US in October imposed unilateral restrictions to stop American companies from exporting semiconductor manufacturing tools.
Estevez last year suggested that the US was looking at a
number of other areas. Asked about reports that the administration was
considering restrictions on quantum and biotechnology, he told the CNAS
think-tank: “If I was a betting person, I would put down money on that.”
A formal decision on whether to implement a total export ban
of chips with US technology to China has not yet been taken.
The commerce department declined to comment but said the
agency, along with other government departments, would “continually assess our
policies and regulations and communicate regularly with external stakeholders”.
Huawei did not immediately respond to a request for comment.
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