Trump administration said to be preparing crackdown on Huawei's global chip supply
- Senior officials in the Trump administration are said to have agreed to new measures to restrict the global supply of chips to China’s Huawei Technologies
- The move comes as ties between Washington and Beijing grow more strained over the coronavirus pandemic
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“This is going to have a far more negative impact on US companies than it will on Huawei, because Huawei will develop their own supply chain,” trade lawyer Doug Jacobson said. “Ultimately, Huawei will find alternatives.”
A person familiar with the matter said the US government has gone to great lengths to ensure impacts on US industry will be minimal.
The move could anger Beijing, which has spoken out against a global campaign by the United States to compel allies to exclude Huawei from their 5G networks over spying concerns. Huawei has denied the allegations.
Most chip manufacturers rely on equipment produced by US companies such as KLA Corp, Lam Research and Applied Materials, according to a report last year from China’s Everbright Securities.
The equipment makers did not immediately respond to requests for comment.
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The decision came when US officials from various agencies met and agreed on Wednesday to alter the Foreign Direct Product Rule, which subjects some foreign-made goods based on US technology or software to US regulations, the sources said.
Attendees likely included top officials from the National Security Council and the US departments of State, Defense, Energy and Commerce. None of them responded to requests for comment.
Huawei declined to comment. TSMC said it “is unable to answer hypothetical questions and does not comment on any individual customer.”
One of the sources said the rule-change is aimed at restricting the sale of sophisticated chips to Huawei and not older, more commoditised and widely available semiconductors.
“It’s impossible to tell the impact until we know the technical thresholds that may apply,” said Washington lawyer Kevin Wolf, a former Commerce Department official.
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“Different foundries make different chips at different capabilities so you wouldn’t know which foundries are affected the most until you know the technical thresholds,” he said.
The United States placed Huawei on a blacklist in May last year, citing national security concerns. The entity listing, as it is known, allowed the US government to restrict sales of US-made goods to the company and some more limited items made abroad that contain US technology.
But under current regulations, key foreign supply chains remain beyond the reach of US authorities, fuelling frustration among China hawks in the administration and prompting a push to toughen up export rules for the company, Reuters reported in November.
“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 chip makers 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.
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