U.S squeezes Huawei on chip design

An export rules change will limit the Chinese telecommunications company's ability to use U.S. gear and software to make semiconductors abroad.

The Commerce Department squeezed U.S. export controls on Chinese telecommunications gear supplier Huawei's manufacturing supply chain on May 15.

The agency's Bureau of Industry and Security (BIS) said it would limit the company's ability to use U.S. semiconductor companies' design and software outside of the U.S.

BIS said it was changing its foreign produced, direct product rules specifically targeting Huawei's acquisition of U.S. software and technology to make semiconductors overseas.

In a related May 15 announcement, the Commerce Department also extended the period U.S. telecommunications companies currently operating with Huawei gear in their networks by 90 days have to get rid of it, allowing them until Aug. 13.

In a May 15 background briefing call with reporters, a senior Commerce Department official said the new date would allow U.S. carriers "to continue to operate while transitioning" to alternative suppliers not on its restricted list.

In the last several years, rural U.S. telecommunications providers have been drawn to Huawei gear because of its relatively low costs.

The federal government has been wary of Huawei's telecommunication gear, particularly its cheap, available 5G wireless equipment, as a potential national security threat, since the company is legally tied to the Chinese government. The U.S. has banned Huawei products from U.S. government networks, altered rules to prevent telecom carriers using the company's equipment from receiving grants to help build rural broadband infrastructure.

In 2019, the U.S. curtailed Huawei's ability to buy parts and components from American companies in the future. Those domestic moves have been paired with a diplomatic offensive abroad, with the U.S. urging allied countries to adopt similar policies and freeze Huawei out of contract negotiations for new 5G networks.

Sen. Ben Sasse (R-Neb.) praised today's move in a statement.

"The United States needs to strangle Huawei. Modern wars are fought with semiconductors, and we were letting Huawei use our American designs," Sasse said. "This is pretty simple: chip companies that depend on American technology can’t jump into bed with the Chinese Communist Party. This rule is long overdue."

In the May 15 call, a senior State Department official said Huawei has been complicit and even "bragged" about its collaboration with the Chinese government's armed forces, particularly on its 5G technologies, to further the country's ambitions.

Despite the domestic controls, BIS said in its May 15 statement that Huawei, has continued to use U.S. semiconductor software and technology to make semiconductors at foundries abroad, through its HiSilicon affiliate.

"This is not how a responsible global corporate citizen behaves," Commerce Secretary Wilbur Ross said. "We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests."

This article first appeared on FCW, a partner site with Defense Systems.