US Moves To Block Semiconductor Shipments To Huawei; China Retaliates

As tension between the U.S. and China grows over the coronavirus, Donald Trump has extended the country’s trade ban on Huawei for another year. On Friday, U.S. officials banned the Chinese tech giant from accessing U.S. designed semiconductor technology, cutting off Huawei’s efforts to destabilize U.S. export controls.

The U.S. Commerce Department issued on Friday a statement announcing the amendment of an export rule that would strategically target the company’s acquisition of semiconductors that are direct products of U.S. software and technology. The move to sever Huawei from global chipmakers is part of the country’s sanctions on China, which Trump has accused of being the culprit behind the spread of the coronavirus.

Under the new rule, all semiconductor shipments of global chipmakers to Huawei will be blocked. Foreign companies using U.S. chip making equipment will now be required to obtain a U.S. license before supplying chips to Huawei or any of its affiliates. This is a huge blow to the smartphone maker, which widely uses semiconductors for its smartphones and telecoms equipment.

In a statement, Commerce Secretary Wilbur Ross said the rule change would prevent U.S. technologies from “enabling malign activities contrary to U.S. national security and foreign policy interests.” He also claimed that Huawei and its affiliates have been ramping up their efforts to undermine the national security-based restrictions that had been previously imposed by the U.S. government.

“This action puts America first, American companies first, and American national security first,” said a senior official of the Commerce Department on Friday.

Prior to the recent ban, the U.S. tried to convince allies to exclude Huawei great from next-generation 5G networks, saying the company might be a threat to national security. Despite being placed on the U.S. economic blacklist in 2019, however, Huawei continued to dodge sanctions by using U.S. software and technology to design semiconductors.

In retaliation, China announced on Friday that it would put U.S. companies such as Apple, Cisco Systems and Qualcomm in the country’s “unreliable entity list.” The communist country also said it would launch investigations and impose restrictions on the said companies and suspend purchase of Boeing airplanes.