November 17, 2019, 10:38


US Tech Companies in Balancing Act Between Huawei Ban And Fulfilling Contracts – Reports

US Tech Companies in Balancing Act Between Huawei Ban And Fulfilling Contracts – Reports

Once the Chinese tech giant Huawei was blacklisted by the US Commerce Department in May, requiring companies to supply it with US-sourced equipment to apply for licenses, there was a halt in shipments as US businesses took time to assess the new rules.

US tech companies targeted by the Trump administration’s ban on exports to Huawei Technologies Co. are reportedly seeking ways to circumvent the legal hurdles and resume some shipments to the ostracised Chinese tech giant while remaining compliant with US regulations regarding the blacklisting of Huawei, reports The Wall Street Journal.

On Tuesday, Micron Technology Inc., one of the world’s largest memory chip makers, announced it had resumed some shipments to Huawei once it was determined they were in compliance with US law.

San Diego smartphone chip manufacturer Qualcomm Inc. has also resumed shipments of certain radio-frequency components to Huawei. While Qualcomm’s primary Huawei product, broadband chips, aren’t being shipped, the chip giant resumed shipments of radio-frequency components after they discovered this was allowed under Commerce Department rules, according to a person familiar with the matter.

Separately, Intel has also resumed shipments of some as-yet unspecified components while remaining compliant with US Commerce Department rules, according to people familiar with the matter.

Micron Technology, a leading memory and digital storage company, said Tuesday that some of the products that it supplied to Huawei weren’t fully restricted.

“We have started shipping some orders of those products to Huawei in the last two weeks,” Chief Executive Sanjay Mehrotra reportedly said in a call with analysts.

Flex Ltd., a San Jose-based technology manufacturer, reported earlier in June that it had resumed 90% of its Huawei-related production after evaluating its business with the Chinese company.

According to reports, other US tech companies including ON Semiconductor Corp. are also exploring opportunities for resuming shipments.

Reports show a growing share of US companies seeking to walk the tightrope between fulfilling their Huawei contracts and continuing to do business with the company, while complying with the US Commerce Department restrictions on exporting technology to the Chinese tech giant.

Huawei was blacklisted by the US Commerce Department in May, requiring companies supplying it with US-sourced equipment to apply for licenses, leading to a halt in shipments as businesses took time to assess the new rules.

While the blacklisting of Huawei signifies that the export from the US to the Chinese company of any type of equipment or technology is prohibited, the regulations don’t prohibit shipments of components made in foreign countries, providing these do not contain more than 25% of US-originated material.

US-sourced content includes physical components, but it also includes software and technical literature.

Another issue for companies to hash out is whether they can classify products as foreign-made, potentially exempting them from Huawei restrictions.

According to the president and chief executive of the Semiconductor Industry Association, John Neuffer, some items could be supplied to Huawei in accordance with Commerce Department rules, as he said last week in a statement:

“Each company is impacted differently based on their specific products and supply chains and each company must evaluate how best to conduct its business and remain in compliance.”

US President Donald Trump’s clampdown on the Asian tech giant came as part of the raging US-China trade war.

Huawei was blacklisted last month as it was added to the United States’ “entity list”, while Trump also signed an executive order essentially banning the company on national security grounds, claiming that Huawei has close ties with the Chinese government.

US intelligence agencies had previously accused Huawei of putting “backdoor” access in its devices to allegedly enable the Chinese government to spy on users.

Beijing and Huawei have both vehemently denied the allegations.

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