The Biden Administration has stopped approving export licenses for U.S. companies wanting to do business with Chinese electronics equipment giant Huawei.
According to a report from Reuters, the move is another major blow to the company that has been dealing with restrictions on 5G equipment and other technologies since 2019 when the Trump Administration added Huawei to the Bureau of Industry and Security (BIS) Entity List, effectively blacklisting any company from doing business.
U.S.-based companies could still apply for an export license through the U.S. Department of Commerce (USDOC) to do business with Huawei such as Qualcomm, which received permission in 2020 to sell 4G smartphone chips. However, no more licenses will be given at this time after the USDOC said it reassessed its policies and regulations, according to the report.
The Chinese foreign ministry spoke out against the move by the USDOC calling it an abuse of a broad notion of national security to suppress Chinese firms. It also said it “goes against principles of the market economy and rules of international trade and finance.”
The U.S. is likely creating a new formal policy of denial for shipping items to Huawei that would include items below the 5G level like 4G, Wi-Fi 6 and 7, artificial intelligence and high-performance computing and cloud items, according to the report.
Other restrictions
Following adding Huawei to the Entity List, the U.S. government added SMIC to the Entity List in 2020 restricting sales of critical electronics for the manufacturing of semiconductors in the country.
SMIC was developing its 7 nm process technology called N+2 prior to the ban in 2020 using deep ultraviolet (DUV) exposure techniques. However, with semiconductors approaching physical limitations, if DUV is used instead of extreme ultraviolent (EUV) technology, it may require a much more complicated production process, which could affect yield and cost performance, according to market research firm TrendForce.
Meanwhile, the USDOC expanded restrictions on high-performance computing such as CPUs and GPUs back in October of 2022, which includes not only domestic companies in mainland China but also U.S.-based suppliers and U.S. citizens from helping support China’s chip development. Further restrictions may be imposed on semiconductors used in aerospace, automotive and military in the future.
When these new restrictions were put in place it caused more than 200 American executives working for Chinese firms to be stuck in the country waiting for more information on if they were even allowed to work.
Additionally, semiconductor giants are considering abandoning chipmaking facilities in China despite getting a one-year exemption from the USDOC to allow them to receive equipment in the factories. This includes Samsung Electronics and SK Hynix.
