Daily Management Review

Licenses To Supply Auto Chips To Huawei Approved By The US: Reuters


Licenses To Supply Auto Chips To Huawei Approved By The US: Reuters
License applications that have sought permission to buy chips for the growing auto component business of China's blacklisted telecom company Huawei, worth hundreds of millions of dollars were approved by United States officials, said a report published by the news agency Reuters.
The trade restrictions that were imposed by the erstwhile Trump administration on selling semiconductor chips and other components by American companies, that are used in the network gear and smartphones businesses of Huawei has severely crippled the Huawei, which is the largest telecommunications equipment maker of the world. The hard-line approach of the Trump era has been adopted by the current Biden administration and has carried on with the ban on exports to Huawei and has previously refused license applications by American companies to sell chips to Huawei for use in or with 5g devices.
But licenses that allow suppliers to sell chips to Huawei for such vehicle components as video screens and sensors have been recently approved by the Biden administration, said the Reuters report quoting sources with knowledge of the matter. Currently, Huawei is shifting its business focus toward areas that are less susceptible to US trade bans.
The bar for approvals by the US was reportedly lowered in the case of auto chips as they are generally not considered sophisticated. Licenses for supplying chips for vehicles that may have other components with 5g capability are now being approved by the government, said the Reuters report quoting a source close to the license approvals.
The US government continues to consistently apply licensing policies "to restrict Huawei's access to commodities, software, or technology for activities that could harm U.S. national security and foreign policy interests", a US Department of Commerce spokesperson told Reuters when asked about the automotive licenses. The spokesperson added that the Commerce Department does not disclose license approvals or refusals.
While not providing any formal comments to the development, a Huawei spokeswoman said: "We are positioning ourselves as a new component provider for intelligent connected vehicles, and our aim is to help car OEMs (manufacturers) build better vehicles", said the Reuters report.
The bans imposed on Huawei during the presidency of Donald Trump were based on perceived threats to the national security of the country and foreign policy interests.
Huawei was initially placed in the so called list of entities, essentially a trade black list of the US Commerce Department in 2019, under which special licenses had to be obtained by American companies to sell their goods and technology to the Chinese company. Later last year, the US administration added on additional restrictions on Huawei which limited the sale of chips made abroad but uses US equipment and technologies. The Trump administration had also widely lobbied with its allies to exclude Huawei from their 5G networks over concerns of the company’s equipment potentially being used for spying on Western countries by Chinese agencies.
All such allegations have been repeatedly denied by Huawei.
The bans imposed by the US forced Huawei to sell a chunk of its once-dominant handset business as the company reported its biggest ever decline in revenues in the first half of 2021.