Washington suspends licenses for US companies to export to Huawei

The Biden administration has stopped granting US companies licenses to export to Huawei as it moves to impose a blanket ban on sales of US technology to the Chinese telecom equipment giant.

Several people familiar with administration discussions said the Commerce Department had notified some companies that it would no longer grant licenses to any group seeking to export U.S. technology to Huawei.

The move marks the latest prong in Washington’s campaign to crack down on the Shenzhen-based technology company, which US security officials believe is helping China engage in espionage. Huawei denies any involvement in espionage.

The Trump administration in 201[ads1]9 imposed tough restrictions on US technology exports to Huawei by adding the group to a blacklist called the “entity list”. The move was part of a strategy to crack down on Chinese companies that Washington believed posed a risk to US national security.

But the Commerce Department continued to grant export licenses to some companies, including Qualcomm and Intel, to provide Huawei with technology unrelated to high-speed 5G telecom networks.

Over the past two years, President Joe Biden has taken an even tougher stance on China, especially in cutting-edge technology. In October, he imposed sweeping restrictions on supplying advanced semiconductor and chip-making equipment to Chinese groups.

Alan Estevez, head of the Commerce Department’s Bureau of Industry and Security, has led a review of China-related policy to determine steps the administration should take to make it more difficult for the Chinese military to use American technology to develop weapons.

Martijn Rasser, a technology expert at CNAS, a think tank, said the latest action was a “really significant move”.

“The actions of the Commerce Department are driven in part by the fact that Huawei as a company is a very different animal than it was four years ago when it was focused on 5G,” said Rasser, a former CIA official, referring to the expansion into areas that submarine cables and cloud computing.

Washington’s move comes as Huawei’s operations have stabilized. Eric Xu, the company’s rotating chairman, said in December that 2023 would be the first year in which Huawei will return to “business as usual”. According to the company, revenue in 2022 was flat at Rmb636.9 billion ($94 billion), following a sharp decline in 2021.

The company secured its survival with a shift into enterprise and public sector business, particularly in China, and its growing cloud business. The fact that the US still allowed some exports to Huawei also helped stave off a complete collapse. Huawei is believed to be backing projects in China aimed at building an import-independent supply chain for semiconductors, an effort that Washington has also begun to target.

Industry insiders said it was too early to assess the impact of the latest measures on Huawei. “An indefinite blanket freeze would of course be disastrous for Huawei, but the outcome of everything else could be quite different,” said a legal expert involved in export license applications.

An executive at a semiconductor design house that has worked with Huawei said the change would come when the export licenses expire. “Since no details of which licenses were granted and when are public, it becomes difficult to predict,” he added.

Secretary of State Antony Blinken is preparing to travel next week to China, the first visit to the country by a member of Biden’s cabinet.

The United States is also stepping up efforts with allies to curb China’s push to develop cutting-edge technology such as semiconductors used in artificial intelligence, nuclear weapons modeling and the development of hypersonic weapons.

Washington last week reached an agreement with Japan and the Netherlands to restrict companies in those countries from exporting certain chip-making equipment to China. In October, the United States imposed unilateral restrictions to stop American companies from exporting semiconductor manufacturing tools.

Estevez suggested last year that the US was looking at a number of other areas. Asked about reports that the administration was considering restrictions on quantum and biotech, he told the CNAS think tank: “If I was a betting person, I’d put money on it.”

A formal decision on whether to implement a total export ban on chips with US technology to China has not yet been made.

The Commerce Department declined to comment, but said the agency, along with other government departments, would “continually review our policies and regulations and communicate regularly with external stakeholders”.

Huawei did not immediately respond to a request for comment.

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