US regulators open door to possible tightening of Huawei chip curb

Platform Industry News: Huawei Technologies retail shop in China

US regulators are open to making changes to close what some see as a loophole in a new rule aimed at curbing global chip sales to blacklisted Chinese telecoms equipment maker Huawei Technologies, two US officials have said. 

KEY POINTS

  • US regulators are open to sure up what some see as a loophole in a new rule aimed at curbing chip sales to blacklisted China’ Huawei Technologies
  • The rule only includes chips designed by Huawei and does not cover shipments if they are sent to Huawei Technologies customers
  • Huawei Technologies was blacklisted by the US last year

The new rule, unveiled by the Commerce Department late last week, expands US authority to require licenses for sales to Huawei of semiconductors made abroad with US technology, amplifying the department’s reach to halt exports to the world’s number two smartphone maker.

But the rule only includes chips designed by Huawei and does not cover shipments if they are sent directly to Huawei Technologies customers. Some industry lawyers see this as a significant loophole.

Asked on Wednesday about the potential for adjusting the rule to close that gap, State Department official Christopher Ashley Ford said the rule itself would provide regulators with the insight to determine if it should be altered.

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The rule will “give us a great deal more information upon which to base export control decisions as we move forward and try to find the right answer to these challenges including by adapting, if we need to, if Huawei tries to work around our rules in some way,” Ford said.

He added that regulators would watch and “certainly make any changes that we think are necessary.”

Huawei declined to comment.

The company was added to Commerce’s “entity list” last year due to national security concerns, amid accusations it violated US sanctions on Iran, stole intellectual policy and could spy on customers, allegations Huawei has denied.

Frustration among China hawks in the administration that the entity listing was not doing enough to cut off Huawei’s access to supplies prompted a crackdown effort, first reported by the news agency Reuters in November, that culminated in Friday’s rule.

An industry lawyer who declined to be named said one way to change the rule would be to tweak the language to capture chips sold “to the benefit of” Huawei, but noted such a change would pose its own challenges.

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Speaking as part of the same briefing with Ford, Cordell Hull, a Commerce Department official, said the agency’s enforcement arm “will be looking at efforts to circumvent the rules.

The team at Platform Executive hope you have enjoyed the ‘US regulators open door to possible tightening of Huawei chip curb‘ article. Automatic translation from English to a growing list of languages via Google AI Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Alexandra Alper. Additional Reporting by Karen Freifeld. Editing by David Gregorio.

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