Biden administration adds new limits on Huawei's suppliers

Biden administration adds new limits on Huawei’s suppliers

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The source said that the Biden administration this week amended the company’s license to sell to China’s Huawei Technologies Co., Ltd., further restricting the company from providing items that can be used with 5G equipment.

The changes could disrupt existing contracts with Huawei that were agreed upon under previous licenses that have now been changed, two of the sources said.

The actions show the Biden administration is reinforcing a hard line on exports to Huawei, the telecommunications equipment maker placed on the trade blacklist over U.S. national security concerns.

A U.S. Commerce Department spokeswoman declined to comment, saying the licensing information is subject to confidentiality. A Huawei spokeswoman declined to comment.

After the company was included on the blacklist of the Department of Commerce in 2019, the U.S. Department of Commerce granted the initial export license. This week’s new conditions bring the old permit more in line with the stricter permit policies implemented in the days of the Trump administration’s decline.

In January, the Trump administration decided it would deny 116 licenses with face values totaling $119 billion, and only approve four worth $20 million, according to a Commerce Department document reviewed by Reuters. Most of those denied fell into three broad categories: memory, handset and other devices, and network applications.

Between 2019 and 2020, the administration approved licenses for companies to sell $87 billion worth of goods and technology to Huawei, the document said. Licenses are generally good for 4 years.

While new restrictions on those licenses hurt some suppliers, one source noted, they also level the playing field between companies, since some received licenses under less restrictive policies.

According to one revised license seen by Reuters, which took effect March 9th, items may not be used “with or in any 5G devices,” a broad interpretation that prohibits the item from going into a 5G device even if it has nothing to with 5G functioning.

Another revised license, which is not authorized for military, 5G, critical infrastructure, enterprise data center, cloud or space applications, went into effect on March 8.

The notice also pointed out that the density of certain items must be less than or equal to 6 GB and requires other technical requirements.

Both types of modified licenses stipulate that before exporting, Huawei or its customers must implement a parts control plan and provide inventory records to the US government upon request.

Companies are placed on the trade blacklist, known as the “entity list,” over national security and foreign policy concerns, and licenses to sell to them generally face a standard of likely denial.

But Trump had an inconsistent approach to Huawei, opening the door to more sales when he was seeking a trade deal but then coming down harder as tensions began rising over the coronavirus and Beijing’s crackdown in Hong Kong last year.

According to the January document seen by Reuters, some 300 applications with stated values of $296 billion were still pending. It’s not clear how many of those have been decided.

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