Under new rules issued by the Commerce Department, any company that sells Huawei any products made anywhere with US technology will require a licence. The Trump administration has also pressured other governments to restrict Huawei from building their 5G networks. The new rules are meant to prevent Huawei from evading US export controls by obtaining electronic parts through third parties

It just got even harder for Huawei Technologies to obtain US-made chips.

Under new rules issued by the US Commerce Department on Monday, any company that sells Huawei any products made anywhere with US technology will require a licence. The measures are to prevent Huawei’s efforts to evade US export controls by obtaining electronic parts through third parties.

The rules build on similar restrictions issued in May when the Commerce Department refined its regulations to include chipsets that are the direct product of certain semiconductor manufacturing equipment located outside the United States. Such a change could prohibit Huawei from obtaining products from overseas companies and bypassing the US restrictions.

“There will be some confusion about how this would be enforced, but the intent is pretty clear. At a minimum it is likely to impact US suppliers who were able to supply Huawei from non-US locations,” said Paul Triolo of the Eurasia Group.

“The major issue will be how other non-US semiconductor suppliers to Huawei treat the rule,” said Triolo. “If enough companies comply globally, Huawei’s ability to generate workarounds will be severely undercut, putting its continued existence as a viable commercial entity in doubt.”

The big wild card, Triolo said, is how domestic Chinese semiconductor manufacturers react to the move. “Semiconductor Manufacturing International Corporation, Yangtze River Memory and Changxin Memory, for example, are not likely to comply, but could face US penalties if they resist,” he said.

The Commerce Department also added another 38 Huawei affiliates – including Huawei Cloud Computing Technology and Huawei Cloud Beijing – in 21 countries to a so-called entity list, which effectively bars foreign companies from exporting US technology to the entities without a licence.

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

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Secretary of State Mike Pompeo said on Monday that the measures were “to protect US national security, our citizens’ privacy and the integrity of our 5G infrastructure from Beijing’s malign influence”.

“The Trump administration sees Huawei for what it is – an arm of the Chinese Communist Party’s (CCP’s) surveillance state – and we have taken action accordingly.”

The restrictions are the latest measures by the Trump administration to crack down on Chinese tech firms to prevent them from advancing their products using American technology on national security concerns. The US put Huawei on the entity list in May 2019.

The US has warned that letting Huawei and other Chinese telecoms companies take part in American tech infrastructure could endanger national security because the companies might be obliged to give up crucial information to Beijing.

The Trump administration has also pressured other governments to restrict Huawei from building their 5G networks. Britain, Australia and Canada have so far excluded the Chinese company from their next-generation infrastructure at the US government’s urging.

Trump administration limiting Huawei access to chips https://t.co/k06pdhnDc7 #FoxBusiness Commerce Department is 'closing loopholes to prevent a bad actor from access to U.S. technology,' Ross tells 'Mornings with Maria' pic.twitter.com/ZykwGVt3WY — U.S. Commerce Dept. (@CommerceGov) August 17, 2020

At the end of June, the US telecommunications watchdog the Federal Communications Commission designated Huawei and ZTE as security threats and banned American firms from using a government fund to purchase their products.

In addition to curbing its access to chips containing American technology, the US has also blocked Huawei from acquiring chips designed in its own labs and built using US technology.

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