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U.S. extends restrictions on Huawei, semiconductor industry concerned of loss

On Monday, the U.S. government has denied extending the temporary general license for Huawei, which allowed the company to manage its existing customers in the country, and now this decision is likely to affect Huawei’s industry partners.

In addition, the U.S. Department of State and the U.S. Department of Commerce informed that the U.S. will expand the reach of the restrictions on Huawei imposed in May 2020, which prohibited chipmakers such as TSMC from producing Kirin chipset for Huawei.

The U.S. Department of Commerce restricted access for Huawei and its 38 non-U.S. subsidiaries in 21 countries on the Entity List. This prohibits sales of items produced in the U.S. and abroad produced from the U.S. software or technology to the same degree as comparable U.S. chips.

Back in May 2019, Huawei added into the U.S. Entity List, which bars it from doing business with the U.S. companies or purchases any U.S. made technology.

But the Entity List later failed to effect on the Chinese tech giant because it had started purchasing required components from alternative suppliers in the overseas markets. Therefore, the U.S. government decided to expand the reach of Entity List to foreign markets.

The U.S. alleges Huawei of being a national security threat and it’s under the control of the Chinese Communist Party. On the other hand, Huawei has repeatedly denied these false allegations.

“The Commerce Department also added 38 Huawei affiliates to its Entity List, which identifies foreign parties prohibited from receiving certain sensitive technologies and allowed Huawei’s Temporary General License (TGL) to expire. The United States has provided ample time for affected companies and persons – primarily Huawei customers – to identify and shift to other sources of equipment, software, and technology and wind-down their operations. Now that time is up.” said the U.S. State Department.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” said Commerce Secretary Wilbur Ross.

“As we have restricted its access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

Meanwhile, the Semiconductor Industry Association expressed its concerns regarding this new action took by the U.S. government and its impact on the semiconductor industry inside and outside of the U.S., reports Reuters.

“These broad restrictions on commercial chip sales will bring significant disruption to the U.S. semiconductor industry. We are surprised and concerned by the administration’s sudden shift from its prior support of a more narrow approach intended to achieve stated national security goals while limiting harm to U.S. companies.”

Surely, Huawei is being suppressed by the U.S. government but the consequences of this new restriction and business loss of Huawei will also reflect on its partners that earn big revenues by doing business with the Chinese tech giant.

Currently, Huawei has not responded or commented on this matter but we’ll keep you posted when it does.

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