US-China tensions rise as Trump administration moves to cut Huawei off from global chip suppliers

A woman wearing a facial mask as a preventive measure against the COVID-19 coronavirus speaks on her smartphone in front of a shopping center in front of a Huawei store (rear) in Beijing on April 1, 2020. (Photo by NICOLAS ASFOURI / AFP) (Photo by NICOLAS ASFOURI / AFP via Getty Images)

Nicolas Asfouri | AFP | Getty Images

On Friday, the Trump administration decided to block semiconductor shipments to Huawei Technologies from global chip makers, in an action that could increase tensions with China.

The US Department of Commerce has said it is amending an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain American software and technology.”

The ministry added that “the announcement ends Huawei’s efforts to undermine US export controls”.

The rule change is a blow to Huawei, not the world. 2 manufacturer of smartphones, as well as TSMC of Taiwan, a major producer of chips for the HiSilicon unit of Huawei as well as its competitors of mobile phones Apple and Qualcomm.

Huawei, which needs semiconductors for its widely used smartphones and telecommunications equipment, is at the heart of a battle for global technological dominance between the United States and China.

The United States is trying to convince its allies to exclude Huawei equipment from next generation 5G networks on the grounds that its equipment could be used by China to spy. Huawei has repeatedly denied this claim.

Huawei has continued to use U.S. software and technology to design semiconductors, the Commerce Department said, although it was placed on an U.S. economic blacklist in May 2019.

Under the rule change, foreign companies using US chip manufacturing equipment will need to obtain a US license before supplying certain chips to Huawei or an affiliate like HiSilicon.

In order for Huawei to continue receiving chipsets or using semiconductor designs related to certain U.S. software and technology, it would have to receive licenses from the Commerce Department.

National security issues

The rule change seeks to “prevent US technology from allowing malicious activity contrary to national security and the interests of the foreign policy of the United States,” Commerce Secretary Wilbur Ross said in a statement, adding that Huawei and its affiliates “have intensified their efforts to undermine this national security.” based on restrictions. “

The Commerce Department said the rule would allow wafers already in production to be shipped to Huawei as long as shipments are completed within 120 days of Friday. The chipsets are expected to be in production by Friday or they are not eligible under the rule.

The United States has placed Huawei and 114 affiliates on its economic blacklist citing national security concerns. This has forced some US and foreign companies to apply for special licenses from the Commerce Department to sell it, but Chinese hawks in the US government have been frustrated by the large number of supply chains beyond their reach.

Meanwhile, the Commerce Department has extended a temporary license which was due to expire on Friday to allow U.S. companies, many of which operate wireless networks in rural America, to continue doing business with Huawei until August 13. He warned that he expected it to be the last expansion.

Reuters said for the first time that the administration plans to change the foreign direct product rule, which subjects certain foreign-made products based on US technology or software to US regulation in November.

Most chip makers rely on equipment produced by American companies like KLA, Lam Research and Applied Materials, according to a report released last year by the Chinese company Everbright Securities.

The Trump administration has taken a series of measures for Chinese telecommunications companies in recent weeks.

The United States Federal Communications Commission (FCC) began last month the process of shutting down US operations of three state-controlled Chinese telecommunications companies, citing risks to national security. In April, the FCC also approved Google’s request for the Alphabet unit to use part of an 8,000-mile submarine telecommunications cable between the U.S. and Taiwan, but not Hong Kong after the agencies. have raised national security concerns.

This week, President Donald Trump extended for another year an executive decree of May 2019 prohibiting American companies from using telecommunications equipment manufactured by companies deemed to pose a risk to national security, a decision observed targeting Huawei and its counterpart ZTE Corp.

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