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US firms may get nod to restart Huawei sales in 2 to 4 weeks

  • Published at 10:57 am July 15th, 2019
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File Photo: A Huawei logo is pictured during the media day for the Shanghai auto show in Shanghai, China April 16, 2019 Reuters

It is still unclear which products will be granted licenses

The US may approve licenses for companies to re-start new sales to Huawei in as little as two weeks, according to a senior US official, in a sign President Donald Trump’s recent effort to ease restrictions on the Chinese company could move forward quickly.

Huawei, the world’s largest telecommunications equipment maker, was added to a Commerce Department list in May that prohibits US companies from supplying it with new American-made goods and services unless they obtain licenses that will likely be denied.

But late last month, after meeting with Chinese president Xi Jinping, President Donald Trump announced American firms could sell products to Huawei. And in recent days, Commerce Secretary Wilbur Ross said licenses would be issued where there is no threat to national security.

Trump’s reversal, and rapid implementation by the Commerce Department, suggests chip industry lobbying, coupled with Chinese political pressure, may well reignite US technology sales to Huawei.

Two US chipmakers who supply Huawei said in recent days they would apply for more licenses after Ross’s comments. They asked to remain anonymous.

A customer response management company and a firm that simulates cross-sectional radar for Huawei are also likely to file applications in the coming days, according to Craig Ridgley, a trade compliance consultant in Washington.

Out of $70 billion that Huawei spent buying components in 2018, some $11 billion went to US firms including Qualcomm (QCOM.O), Intel (INTC.O) and Micron Technology (MU.O).

“Since there’s no downside, companies are absolutely submitting applications, as required by the regulations,” said Washington lawyer Kevin Wolf, a former Commerce Department official.

The entity list

A Huawei spokesman said “the Entity list restrictions should be removed altogether, rather than have temporary licenses applied for US vendors. Huawei has been found guilty of no relevant wrongdoing and represents no cybersecurity risk to any country so the restrictions are unmerited.”

US companies can currently sell goods in order to maintain existing networks and provide software updates to existing Huawei handsets, but are prohibited from making new sales of American-made goods and services.

Furthermore, not all US sales to Huawei hinge on government approvals of license requests. Some US chipmakers sales to Huawei may not need licenses because their products could be beyond the scope of US export controls since many are manufactured abroad with few US components.

US officials have sought to clarify the new policy in recent weeks, saying they will allow sales of non-sensitive technology readily available abroad if national security is protected. But they have also reiterated that Huawei remains on the entity list, and relief would be temporary.

The US semiconductor industry has been lobbying for broader relief, arguing that US security goals should be advanced in a way that does not undermine the ability to compete globally and retain technological leadership. Suppliers want to be allowed to provide customer service support for chips they build and sell overseas, or the approval to ship new American-made equipment to Huawei and its subsidiaries around the world.  

Granting licenses

Still, it is unclear which products will be granted licenses. Some US suppliers sought clarity at a conference the Commerce Department held in Washington this week.

One manufacturer’s representative was told by the senior US official that licenses could be granted in two to four weeks at the conference on Thursday.

The person, who did not want to be identified, said the official did not delineate the criteria for license approvals, but she came away believing they would be made on a case-by-case basis, at least at first, as the agency seeks to form more broad opinions.

When asked about the guidance from the senior official, a Commerce Department spokesman said the agency is “currently evaluating all licenses and determining what is in the nation’s best national security interest.”

The United States has pending cases against Huawei for allegedly stealing American intellectual property and violating Iran sanctions. It also has launched a lobbying effort to persuade US allies to keep Huawei out of next-generation 5G telecommunications infrastructure, citing concerns the company could spy on customers. Huawei has denied the allegations.

Eric Hirschhorn, a former undersecretary of Commerce, said the problem for government officials now reviewing the licenses is that they don’t know where the administration is going.

“The policy two minutes ago may not be the policy two minutes from now,” Hirschhorn said.