The Trump administration placed Huawei on the Commerce Department’s entity list in May for violating US sanctions on Iran, prohibiting US-based companies from doing business with it. It then granted a 90-day reprieve of the effective date to soften the blow to US companies.

Under Commerce Department rules, US companies that still want to sell to Huawei must apply for licences and the chip makers and software providers that depend on Huawei as a customer are already beginning to argue why they should get one.

The companies, especially chip makers, have included detailed financial projections and other data in their applications showing the potential for significant harm, according to people briefed on the matter who asked not to be named because they feared going public might make it harder to get licences.

Companies have argued that the ban has already harmed the outlook for US chip makers by prompting Chinese companies to reduce their reliance on the US and find alternative suppliers.

Some chip makers have argued that the loss of revenue from Huawei and its affiliates could force them to cut back on research and development, slowing down the development process for new computer chips. That could even hurt US military technology, they say, because the military relies on faster and more capable chips. Critical infrastructure, which also relies on computer chips, could become more vulnerable to failure and attacks, some companies have argued.

It’s unclear whether the arguments have resonated with the Commerce Department or the White House, where a final decision is likely to be made on the licences. A rejection is the assumed response under Commerce Department rules.

Tech companies said they are treading carefully for fear that criticism of US policy could offend the Trump administration and open them to retaliation.

US companies have not always been allowed to apply for a licence to sell to companies on the entity list, which was created to sanction foreign companies and people whose actions the government has claimed are threatening to US national security or foreign policy interests. But exceptions were made in March 2016 when the Commerce Department’s Bureau of Industry and Security was planning to place another Chinese company, ZTE, on the entity list.

At the time, ZTE was in negotiations with the US government over selling products to Iran in violation of US sanctions. Adding ZTE to the list was a way to put pressure on them in the negotiations, said Kevin Wolf, the assistant secretary of state for export administration at the time. He saw giving US companies licences to sell to ZTE despite the ban as a way to encourage cooperation. The Trump administration lifted the ZTE ban last year after it agreed to pay a US$1 billion penalty and restructure its management.

Whether the administration has a similar strategy for Huawei is unknown, as is whether Huawei and the administration are negotiating a settlement. Some have speculated that adding Huawei to the entity list was a tactic to increase pressure on the Chinese government in ongoing trade negotiations.

“The Chinese government has continually put Huawei on the table in trade talks,” said James Lewis, a senior vice-president at the Centre for Strategic and International Studies. “I think Huawei knows the only people who can save them when it comes to the US is the Chinese government.”