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Huawei statement: What happens next?



Ren Zhengfei, CEO of Huawei, talks to CNBC at the Huawei headquarters in Shenzhen, China.

Justin Solomon | CNBC

President Trump defended his position on Huawei this weekend and told participants at the Osaka Economic Summit in Osaka that, despite the earlier ban on Chinese hardware, US technology companies may return to selling components and software to Huawei.

Chip shares, including Qualcomm and Broadcom, rose sharply on Monday morning at the news, but decayed in the afternoon.

The White House and Commerce Department have not yet clarified whether the policy will affect Huawei's use of Google's Android operation system on many of its mobile devices, or Microsoft's Windows operating system on their computers.

But a Microsoft spokesperson said the company did "an initial evaluation" by the Huawei Department of Commerce department and "will continue to offer Microsoft software updates to customers with Huawei devices."

"We still provide Windows software updates to customers with Huawei laptops, "said the spokesman. [1

9659002] Google did not immediately respond to comments, and a Huawei spokesman said the company "did not have any further details at this time."

Huawei will remain on a list of entities excluded from certain business activities, trusted Larry Kudlow on Sunday and licenses to sell to the company will be limited if the US has national security issues.

A new negotiating chip

Trump also emphasized that trade talks were an avenue through which Huawei can see more restrictions simplified in the US marketplace.

The issue of Huawei being handled mainly as a national security issue or an economic negotiating circuit, continues to cause disagreement in Washington.

Lawmakers like Republican late Marco Rubio and Democratic late Mark Warner have warned the White House Not to blend the country's concerns about Huawei with its economic policies. In response to the return, Rubio also introduced legislation to strengthen the full ban on Huawei.

Members of the intelligence community, who have long claimed Huawei's close relations with Beijing, make it impossible to allow the company to provide technology infrastructure in the United States has also been skeptical of giving the company concessions as part of an economic agreement.

But other organizations, including trade and industry groups that support the US semiconductor industry, continue to advocate further relaxation of the rules.

The Semiconductor Industry Association said last week that "remaining concerns limiting our ability to sell commercial products in large markets will destroy the US semiconductor industry's competitiveness," but showed some optimism in recent developments.

Disconnecting could put Huawei on a very long way towards fuller participation in the US market, a prospect that could draw on even longer the US trade negotiations with China.

"Trump is trying to interact a deal out of China, and Huawei has become a negotiating chip," said Brian Finch, a public policy and cybersecuirty partner at the law firm Pillsbury Winthrop Shaw Pittman.

"Nevertheless, most security professors recognize that Huawei's products are problematic, so whatever the deal is struck – even if it includes security restrictions – it will be revised in another administration or challenged by the congress, unless Huawei can confirm that it is not a security risk, "Finch said. "That burden is on Huawei, and it's heavy to carry."

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