US tightens restrictions on Huawei's access to American technology

The move will thwart efforts to circumvent US export controls, the Department of Commerce says

In this Oct. 31, 2019 photo, man uses his smartphone as he stands near a billboard for Chinese technology firm Huawei at the PT Expo in Beijing. Chinese tech giant Huawei kept its global business growing for almost a decade while Washington piled sanctions on the company and lobbied its allies to keep the company out of telecom networks. Now, Huawei is starting to suffer in earnest as the Trump administration steps up efforts to slam the door on access to Western components and markets in a widening feud with Beijing over technology and security. (AP Photo/Mark Schiefelbein)

The US Department of Commerce has further restricted Huawei’s access to items produced using American technology and added another 38 affiliates of the company to its blacklist.

The move, which is effective immediately, is expected to thwart efforts by the Chinese company to circumvent US export controls, the department said on Monday.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from US software and technology ... This multipronged action demonstrates our continuing commitment to impede Huawei’s ability to do so,” Commerce Secretary Wilbur Ross said.

The latest order prohibits any foreign semiconductor company from selling chips developed or produced using US software to the Chinese company, without first obtaining a licence to do so.

The department said Huawei’s 38 affiliates in 21 countries were added to the entity list because of the “significant risk” of them acting on Huawei’s behalf in a manner that is contrary to the national security or foreign policy interests of the US.

“There is reasonable cause to believe that Huawei otherwise would seek to use them to evade the restrictions imposed by the entity list.”

Huawei and 114 of its affiliates were placed on a Bureau of Industry and Security entity list for a year in May 2019, banning US companies such as Google and Microsoft from doing business with them.

President Donald Trump later extended the ban to 2021.

Earlier this month, Huawei said it was fast running out of chips due to the US trade sanctions and expected the situation to deteriorate by September.

The company has in the past described the restrictions as "arbitrary and pernicious" and said the US move "threatens to undermine the entire industry".

“It will [affect] the expansion, maintenance and continuous operations of networks worth hundreds of billions of dollars that we have [put in place] in more than 170 countries,” Huawei said earlier this year.

The Shenzhen-based company is a key provider of 5G components in markets outside the US.

Huawei had secured 77 5G contracts around the world – 12 of them in the Middle East – by the end of last year and the figure rose to 90 at the end of February this year.

About half of the contracts are in Europe, where it faces tough competition from companies such as Nokia, with 79 contracts, and Ericsson, with 100 contracts.