U.S. President Donald Trump’s administration has informed China’s Huawei suppliers, including Intel Corp, that it is revoking some licenses to supply the Chinese company and plans to deny applications for other licenses, Reuters said, citing people familiar with the matter. The move, which could be Mr. Trump’s final blow before he leaves office, is aimed at undercutting Huawei’s longstanding efforts in the United States and continues to point the finger at Chinese companies for threats to national security and foreign policy interests.
The U.S. Semiconductor Industry Association noted last week that the Commerce Department had issued plans to reject a number of license applications for exports to Huawei and revoke licenses previously issued. It would be more than a single revocation, said the people, who spoke on condition of anonymity, since Huawei’s eight licenses are held by four U.S. suppliers. Japanese flash memory chip maker Kioxia Corp, formerly known as Toshiba Memory, has had at least one license revoked, the sources said, without comment. A spokesman for Intel, a Huawei supplier, was not immediately available for comment, and a spokesman for the Ministry of Commerce did not respond to a request for comment.
The Trump administration’s move affects a wide range of products in the semiconductor industry, according to an email from the Semiconductor Industry Association, which asked whether companies had been notified. It also noted that companies are waiting for a months-long pending permit decision, and that with the Trump administration less than a week’s buffer, dealing with a permit denial will be a challenge. Companies notified of the rejection have 20 days to respond, and the ministry has 45 days to inform companies of any changes in the decision, or the changes will become final. The company will then have 45 days to appeal in an attempt to overturn the decision. It is worth noting that the US added Huawei to the MOFCOM’s list of entities in May 2019.
Before the Trump administration’s latest action, there were about 1,500 permits in the application process, involving $120 billion worth of goods and technology, that had been held up in the United States for various reasons. People familiar with the matter told Reuters that the agencies could not reach a consensus on whether approval should be granted. Sources also said there is still $280 billion of Huawei goods and technology that has yet to be processed, but now faces a higher possibility of rejection. The latest decision was made at a meeting of senior officials from the U.S. Commerce, Defense, Energy and state governments starting Jan. 4, when officials developed detailed guidelines for which technologies can support 5G and also apply the standard in practice.
Huawei has lost contact with several major suppliers around the world since US President Donald Trump announced trade sanctions against the company. Nikkei Asia, citing two sources, said Huawei had spent a year and a half acquiring 20 semiconductor-related companies, with 50% of the deals completed in the last five months. The investment covers chip manufacturing dominated by companies from the US, Japan, South Korea and Taiwan, and Chinese government officials are helping Huawei find targets to invest in and are now targeting any areas where chip development is lacking.
Huawei is the world’s largest telecoms equipment providers and second largest smart phone manufacturers, is committed to cooperation with several Chinese chip manufacturers to seek possible investment, but also to maintain their own chip design and development, they acquired related business including chip design tools, materials, compound semiconductor, semiconductor chip production and testing equipment. Huawei is also quietly building a small chip production line at its Shenzhen headquarters for research purposes, according to several people familiar with the matter. “From an industry-wide perspective, the importance of Huawei’s R&D production line in Shenzhen, which starts in the second half of 2020, is to help speed up chip development and ensure that all of the company’s designs can be smoothly put into production later on,” the source said.
Huawei is strengthening its Investment activities primarily through Hubble Technology Investment, its wholly owned venture capital arm with paid-in capital of $417 million. Since the United States placed Huawei on a trade blacklist that restricts the use of American technology, Hubble has made strategic investments in at least 25 Chinese technology companies, 20 of which are semiconductor-related, according to data analysis by Qicchacha, a Chinese business data provider. Of the 25 investments, 18 were made in 2020, 10 of them after the US blacklist was published. Huawei has also made strategic investments in domestic chip developers, particularly in communications semiconductors, such as radio frequency chips, analog chips and antennas. It’s worth noting that U.S. competitors in this space include Skyworks, Qorvo, Broadcomm and Qualcomm.
In an update on Huawei Chief Financial Officer Meng Wanzhou, her lawyer asked the court to relax security measures because of the risk of an outbreak. With the help of an interpreter, Ms. Meng’s husband, Liu Xiaozong, testified in English that he believed Ms. Meng was at increased risk of infection because she came into contact with multiple security personnel every time she left the house. He said his wife had thyroid cancer and also suffered from high blood pressure, while their daughter and her son were afraid to be identified during their visit to Vancouver because of the presence of private security guards. Lawyers for Ms. Meng want her to be allowed to leave the house beyond curfew hours without the presence of security personnel. The curfew begins at 11 p.m. and lasts until 6 a.m. Ms. Meng has been wearing electronic monitoring equipment and can only visit certain parts of Vancouver, but not the airport.
Canada’s prime minister, Justin Trudeau, urged the world on Thursday to maintain a united front against China’s detention of foreign citizens, saying that every country was vulnerable. “We have a very high level of alliance not only with the United States, but with our Allies around the world, constantly raising the issue of coercive diplomacy that China is increasingly using,” Trudeau said in an interview at the Reuters Next summit that aired on Thursday.