Biden Administration Considers Cutting Off Huawei From U.S. Suppliers

U.S. cites national-security concerns as it weighs tightening export controls targeting the Chinese company

The Biden administration is considering entirely cutting off Chinese telecommunications giant Huawei Technologies Co. from U.S. suppliers over national-security concerns by tightening export controls targeting the firm, according to people familiar with the matter.

The move—should the administration move forward—would mark the latest salvo in the high-stakes clash between the world’s two largest economies as U.S. policy makers seek to counter China’s industrial policy they say threatens Western interests.

The Trump administration in 2019 added Huawei to the Department of Commerce’s “Entity List,” a roster of foreign companies deemed to be national-security threats. However, the Commerce Department later agreed to grant licenses to U.S. companies allowing them to sell technology to Huawei as long as it wouldn’t put national security at risk. 

The Biden administration is now considering no longer granting such licenses, although no decision has been made, the people familiar said. The deliberations were previously reported by Bloomberg and the Financial Times.

The U.S. items exempted from the Huawei blacklist include less advanced chips used in the company’s lineup of smartphones and personal computers. Huawei has been unable to offer a 5G-enabled smartphone because U.S. restrictions cut it off from the most advanced chips needed to power such devices. 

Huawei declined to comment. The company, which is the world’s largest maker of telecom equipment, has said its products aren’t a national-security risk. 

Officials have signaled to Qualcomm Inc. and Intel Corp., which continue to supply Huawei, that this is a good time to wind down their sales to the Chinese company, said one of the people familiar with the matter. Intel and Qualcomm declined to comment.

One of the ideas under consideration is to use more stringent controls that not only ban direct dealings with the company, but that also prohibit exports to other companies and intermediaries who then supply Huawei, according to this person. That policy has the potential to suppress Huawei’s dealings outside the U.S. given the extent U.S. components are used internationally.

A Commerce Department spokeswoman said that the department doesn’t publicly comment on discussions with or deliberations about specific companies.

“Working closely with our interagency export controls partners at the Departments of Energy, Defense and State, we continually assess our policies and regulations and communicate regularly with external stakeholders,” she said.

Huawei’s placement on the entity list cut into its bottom line, although the company said late last year that it had exited “crisis mode.” Even so, Huawei didn’t feature among the top five providers of handsets in China last year, according to research firm International Data Corp. Those five vendors, including Apple Inc. and Chinese manufacturers, accounted for about 84% of smartphone shipments in the country in 2022, according to IDC. 

While the direct market impacts of an outright ban on any exports to Huawei may be limited because of Huawei’s waning U.S. dealings, it could signal further deterioration in the U.S.-China relationship. 

U.S. policy maker concerns over China’s policies and the country’s broader threat to Western interests have continued to grow since Huawei’s addition on the entity list. For many policy makers, the Covid-19 pandemic’s disruption of global supply chains brought into stark relief the national-security risk of China controlling critical segments of the telecommunications industry. 

Underscoring those concerns, President Biden tapped Thea Kendler, a former attorney on the criminal case against Huawei and its Chief Financial Officer Meng Wanzhou, as assistant secretary for export administration at the Department of Commerce, a post vital to controlling exports to China.

Diplomatic tensions have escalated in recent months as Beijing and Washington exchanged tit-for-tat punitive policies. The Commerce Department has been deliberating a final rule for the Huawei export controls. It published an interim final rule in September, seeking comments in anticipation of publishing a final rule in the following months.

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