As the U.S. and Chinese governments butt heads over the continued spread of coronavirus (opens in new tab), senior Trump administration officials have reportedly agreed to new measures to restrict the global supply of chips to Huawei technologies, Reuters (opens in new tab) reported citing unnamed sourced this week.
Last May, the U.S. blacklisted Huawei (opens in new tab) over supposed concerns that the company was purposefully leaving information vulnerabilities in its products that could be accessed by “foreign adversaries.” This allowed the U.S. government to prevent domestic goods made by companies without a specialized license from shipping to the Chinese company, as well as certain foreign items containing technology made in the U.S. The blacklist came in the midst of tariff negotiations between the two superpowers.
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Now, the U.S. government is reportedly looking to expand the ban’s impact on foreign suppliers, like TSMC, by requiring any companies that use U.S. chipmaking equipment, domestic and international, to acquire a U.S. license before supplying certain chips to Huawei.
According to one of Reuters’ sources, the additional regulation is largely aimed at preventing chip sales to Huawei from TMSC, which is both the world’s largest contract maker and a major supplier of chips for Huawei’s HiSilicon unit. A report from China’s Everbright Securities last year also detailed that producers like KLA Corp, Lam Research and Applied Materials could also be impacted by the ban. If TSMC were hit by the ban, it could open up chips normally meant for Huawei to go to companies like AMD, Nvidia and Apple instead.
Potential consequences from the proposed change aren’t limited to foreign markets, however. “This is going to have a far more negative impact on U.S. companies than it will on Huawei,” trade lawyer Doug Jacobson told Reuters, predicting that Huawei would make its own supply chain.
The report didn't clarify whether it expects President Trump, who criticized the enhanced restrictions last month, will sign off on the change.
Huawei declined to comment on the story when Reuters reached out. With Chinese producers starting to get back into full productivity (opens in new tab) and the U.S. now surpassing China (opens in new tab) in COVID-19 cases, however, negotiations across both sides are set to be tense.