US squeeze on Huawei worries China

US squeeze on Huawei worries China

Washington puts export licences on hold, weighs total ban on US suppliers selling to Chinese tech firm

A woman walks past a Huawei store in Beijing on Tuesday. Reports from Washington say the Bidebn administration is considering a total ban on sales of any American-made products to the Chinese company. (Photo: Bloomberg)
A woman walks past a Huawei store in Beijing on Tuesday. Reports from Washington say the Bidebn administration is considering a total ban on sales of any American-made products to the Chinese company. (Photo: Bloomberg)

China is "seriously concerned" about a report that the United States has stopped approving licences for US companies to export items to the tech giant Huawei, a foreign ministry spokesperson said on Tuesday.

“We are closely following relevant developments,” Mao Ning told a regular news briefing in response to a query on the export curbs.

She also expressed concern about reports that the Biden administration is considering cutting off Huawei from all of its American suppliers, as the US government intensifies a crackdown on the Chinese technology sector.

“China is strongly against the US’s abuse of state power to hobble Chinese companies by stretching the concept of national security,” Mao said, adding that the country would protect its companies without saying how.

Sales from US companies to Huawei have been limited for four years, since former president Donald Trump added the company to the so-called US “entity list” amid national security concerns. American suppliers such as Intel and Qualcomm have since required government approval to sell to the telecom equipment giant.

Now, some officials in the Biden administration are advocating for banning all sales to Huawei — long suspected of ties to the Beijing government and Chinese military — as the administration debates whether and how to adjust its licensing policy, according to people familiar with the matter.

The people asked not to be identified because a decision has not been made. Huawei has repeatedly denied that any of its equipment could be used for surveillance by the Beijing government.

Tensions with China have been rising throughout Joe Biden’s presidency, and he’s under pressure from Republicans controlling the House to continue squeezing Beijing, particularly to limit the country’s technological advances.

Last week, the administration persuaded the Netherlands and Japan to join with the US in restricting exports of advanced semiconductor manufacturing machinery to China.

Huawei was once one of the world’s largest buyers of electronic components and a hugely important part of the supply chain because of its position in the handset and networking equipment industries. Trump’s ban on certain sales crippled the Chinese company, while wiping out huge amounts of revenue for US suppliers such as Broadcom Inc.

But the US Commerce Department continued to allow some other products to be supplied to Huawei. The company remains a $100-billion behemoth that is spearheading the expansion of the world’s largest 5G network at home, while aiding construction of critical broadband from Africa to the Middle East. In December, the company declared it was “business as usual” after successfully weathering US tech sanctions.

Under the new policy that some US officials advocate, all licence requests to supply Huawei would be denied. Meanwhile, most current applications for new licences are languishing in a stalled approval process, the people said, creating a de facto halt.

The longer-term impact on Huawei from that action is uncertain. It still derives enormous revenue from local wireless carriers such as China Mobile and state enterprises that rely on Huawei to build local-level and corporate networks. China operates more than 2 million 5G base stations, or more than 60% of the world’s total, according to industry executives. 

Huawei has also been stockpiling foreign components such as chips and sourcing or researching alternatives to American circuitry. Representatives for the company did not immediately respond to requests for comment.

Intel and Advanced Micro Devices provide Huawei with processors it uses in its Mate range of laptops, while Qualcomm sells processors and modems that are the core components of Huawei’s diminished range of smartphones.

It’s not clear how soon the US administration may act on a policy change, the people familiar with the matter said. They cautioned that discussions are at an early stage, and some said timing for a decision could coincide with the four-year anniversary of Huawei’s addition to the entity list in May. 

Shutting off sales to Huawei wouldn’t be as devastating for US companies as it once was. The Chinese company has spun off a large chunk of its smartphone business, mostly offers only lower-bandwidth 4G phones under its own name and has seen its brand damaged by the US campaign against it.

Underlining the decline in its importance, Huawei represents less than one percent of revenue for Qualcomm, Intel and AMD, according to Bloomberg supply chain analysis.

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