U.S. to Restrict Huawei’s Global Chip Supply

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Senior Cabinet members have agreed to new restrictions on Huawei Technologies’ global supply of chips. Huawei is a telecommunications equipment company based in Shenzhen, Guangdong, China, which sells smartphones and home electronic goods, but also has a contentious relationship with the U.S. government. There is a lot of distrust surrounding Huawei over accusations that the company allows the Chinese government access to data and technology to spy on its citizens.

An inside source for Reuters claimed officials within the Trump administration had finally agreed to these long discussed restrictions.

New Restrictions

The new rule places an extra barrier on Huawei’s supply chain. Now, foreign companies that purchase chip-making equipment from the U.S. will have to get a U.S. license before selling certain sophisticated chips to Huawei. The blacklisted Chinese company will still be able to access older semiconductors.

Conflicting Opinions on the Matter

A group of government officials from different departments and agencies of the government assembled last Wednesday to discuss the issue. In the end they came together to amend the Foreign Direct Product Rule. The problem is that the change is in stark contrast to the President Trump’s stated disagreement with the proposal in February. The U.S. Department of Commerce has made no announcement of the change, although it is the department that would need to sign off on it.

Specialists on trade relations have warned that this type of export control will upset U.S. allies. America provides a large majority of chip-making equipment worldwide, meaning the decision does not impact Huawei alone, but all countries with chip-making industries.