It is currently illegal for US-based companies to do business with Huawei without government consent, and its affiliate came to a standstill as it cannot transfer technology to the parent company.
Chinese telecom and phone maker Huawei is cutting jobs at its US-based research arm, Futurewei Technologies, after the Trump administration effectively banned it from US communications networks.
Huawei had around 1,500 employees in the United States, including 850 in Futurewei, which operates out of Silicon Valley and the greater Seattle, Chicago and Dallas areas.
But Futurewei has just laid off over 600 workers (two-thirds of its headcount) citing “the curtailment of business operations”, according to Reuters.
The job cut became effective 22 July and came after Huawei got blacklisted by the US government.
The Trump administration accused Huawei of posing a national security risk and banned the Chinese tech titan and its non-US affiliates from buying parts and components from American companies.
The move has made it illegal for Huawei to acquire technology from its R&D subsidiary without US government approval. Last month, Futurewei was reported to have distanced itself from its parent company and even barred Huawei staff from its offices.
The Commerce Department earlier said it would grant licences to companies seeking to do business with Huawei where there is no “threat to US national security”.
On Monday, Donald Trump agreed to issue “timely” licences in response to a request from several major American tech corporations – Google, Qualcom, Micron, Western Digital Corporation, Cisco, Intel, and Broadcom.
The US fears Huawei could be installing backdoors in its telecom equipment that the Chinese government could use to steal commercial secrets and private information – a claim the firm vehemently denies.
Although Huawei – the world’s largest telecom equipment manufacturer – also voiced intent to sign “no-spy” agreements to restore trust, the Trump administration banned it from use by government agencies and went to great lengths to exclude it from overseas 5G networks.
The Huawei crackdown coincided with the Trump-led trade war on China, and the US president has indicated that he could lift crippling restrictions on the embattled firm in return for concessions on trade.