U.S. Moves to Block Huawei Shipments

In a move that could escalate tensions with China, the U.S. government is blocking shipments of semiconductors to Huawei Technologies from global chipmakers.

The U.S. Commerce Department said it was amending an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”

The rule change is a blow to Huawei, the world’s second largest smartphone maker, as well as to Taiwan’s TSMC, a major producer of chips for Huawei’s HiSilicon unit, and mobile phone rivals such as Apple Inc. and Qualcomm Inc.

Huawei, which needs semiconductors for its widely used smartphones and telecom equipment, is in the midst of a battle for global technological dominance between the United States and China.

The United States is trying to convince allies to exclude Huawei gear from next generation 5G networks on the grounds that its equipment could be used by China for spying. Huawei has repeatedly denied the claims that it spies on governments and companies it does business with. Huawei has continued to use U.S. software and technology to design semiconductors despite being placed on a U.S. economic blacklist in May 2019.

Under the rule change, foreign companies that use U.S. chipmaking equipment will be required to obtain a U.S. license before supplying chips to Huawei, or an affiliate like HiSilicon. In order for Huawei to continue to receive some chipsets or semiconductor designs tied to certain U.S. software and technology, it would need to receive licenses from the Commerce Department.

The Commerce Department said the rule will allow wafers already in production to be shipped to Huawei as long as the shipments are complete within 120 days from Friday. Chipsets would need to be in production by Friday or they are ineligible under the rule.

Separately, the Commerce Department extended a temporary license that was set to expire Friday to allow U.S. companies, many of which operate wireless networks in rural America, to continue doing business with Huawei through Aug. 13. It warned it expected this would be the final extension.