US closer to cutting off Huawei’s global chip supply – NS Tech

Senior officials in the Trump administration agreed to new measures to restrict the global supply of chips to Huawei Technologies, according to reporting by Reuters.

The proposal, which was reportedly drafted but not approved last month, posits a change to US regulations that would mean foreign companies that use US chipmaking equipment would be required to obtain a US license before supplying certain chips to Huawei. This would permit the US to intercept shipments of chips to Huawei Technologies from companies such as Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker.

The amendment would be made to the Foreign Direct Product Rule, which subjects some foreign-made goods based on US technology or software to US regulations. One of the Reuter’s sources said the amendment is aimed at curbing sales of chips to Huawei by TSMC, which is major producer of chips for Huawei’s HiSilicon unit.

Most chip manufacturers are reliant on equipment made by US companies such as KLA Corp, Lam Research and Applied Materials, according to a 2019 report from China’s Everbright Securities.

It’s not yet clear if President Donald Trump will sign-off on the agreement, as he expressed objection to it last month. “I want our companies to be allowed to do business. I mean, things are put on my desk that have nothing to do with national security, including with chipmakers and various others. So we’re going to give it up, and what will happen? They’ll make those chips in a different country or they’ll make them in China or someplace else,” Trump said in response to reporting on the draft proposal.

Some have warned that the move could end up backfiring. “This is going to have a far more negative impact on U.S. companies than it will on Huawei, because Huawei will develop their own supply chain,” trade lawyer Doug Jacobson told Reuters. “Ultimately, Huawei will find alternatives.”

Citing national security concerns, the US placed Huawei on a blacklist in May 2019 that forced some US and foreign companies to seek special licenses from the Commerce Department to sell to it.

Huawei didn’t respond to a request for comment.


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