Senior officials in the Trump administration agreed to new measures to limit the global supply of chips to Huawei technologies in China, sources familiar with the issue said as the White House ramps up criticism of China over the corona virus. The move comes as ties between Washington and Beijing tighten, with barbs on both sides blaming the spread of the disease and an escalating tit-for-tat on the expulsion of journalists from both countries.
Under the proposed rule change, foreign companies using U.S. chips-making equipment should obtain a U.S. license before supplying certain chips to Huawei. The Chinese telecom company was blacklisted last year, limiting the company’s suppliers. One of the sources said the rule change is aimed at limiting the sale of chips to Huawei by Taiwan Semiconductor Manufacturing Co, a major manufacturer of chips for Huawei’s HiSilicon unit, as well as the world’s largest contract maker.
It is unclear whether President Donald Trump, who seemed to push back against the proposal last month, will sign the rule change. But if completed, it could hit Huawei and TSMC, harming U.S. companies as well, sources said. “This will have a much more negative effect on US companies than on Huawei, as Huawei will develop their own supply chain,” said trade attorney Doug Jacobson. “Ultimately, Huawei will find alternatives.”
One person familiar with the matter said the U.S. government has gone to great lengths to ensure that its impact on U.S. industry is minimal. The move could anger Beijing, which has spoken out against a global campaign by the United States to force allies to exclude Huawei from its 5G networks due to espionage issues. Huawei has denied the allegations.
Most chip manufacturers rely on equipment produced by U.S. companies such as KLA Corp, Lam Research and Applied Materials, according to a report from China’s Everbright Securities last year. Equipment manufacturers did not immediately respond to requests for comment.
The decision came when U.S. officials from various agencies met on Wednesday and agreed to amend the Foreign Direct Product Rule, which makes some foreign-made goods based on U.S. technology or software subject to U.S. regulations, the sources said. Attendees were likely to include top officials from the National Security Council and the United States Department of State, Defense, Energy, and Commerce. None of them responded to requests for comment.
Huawei declined to comment. TSMC said it “cannot answer hypothetical questions and cannot comment on an individual customer.” One of the sources said the rule change is intended to limit the sale of advanced chips to Huawei and not older, more commercialized and widely available semiconductors.
“It is impossible to see the impact until we know the technical thresholds that may apply,” said Washington attorney Kevin Wolf, a former Department of Commerce official. “Different foundries make different chips with different capacities, so you don’t know which foundries are affected by most until you know the technical thresholds,” he said.
US-CHINA VOLTAGE The United States blacklisted Huawei last May, citing concerns about national security. The entity listing, as it is known, allowed the U.S. government to restrict sales of U.S.-made goods to the company and some more limited items made overseas that contain U.S. technology.
But under current regulations, key foreign supply chains remain out of reach for the U.S. authorities, fueling frustration among Chinese hawks in the administration and spurring export controls, Reuters reported in November. The hawks’ efforts were jeopardized last month when Trump reacted strongly to the proposed crackdown, after Reuters and the Wall Street Journal reported that a move to block global chip sales to Huawei was being considered.
“I want our companies to be able to do business. I mean, things are being put on my desk that have nothing to do with national security, not even with chip makers and various others. So we give up and what will She make those chips in another country or they make them in China or elsewhere, “said Trump. (Additional reporting by Mike Stone in Washington, Editing by Chris Sanders, Nick Zieminski and Dan Grebler)
(This story has not been edited by staff and is automatically generated from a syndicated feed.)
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