Friday, 27 March 2020 10:46

US moves to block Taiwan firm from selling chips to Huawei: report Featured

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US moves to block Taiwan firm from selling chips to Huawei: report Pixabay

The United States appears to be moving ahead with new proposals to tighten the conditions for American semiconductor companies to do business with Chinese telecommunications equipment vendor Huawei Technologies, with cabinet officials agreeing at a meeting on Wednesday to tighten things up.

The Wall Street Journal reported on Thursday that the new rule would mean that an export licence would be needed if companies wanted to sell to Huawei many semiconductors that are produced by chip-manufacturing tools designed in the US.

This would mean that the US Commerce Department could limit the sale of chips made by Taiwan Semiconductor Manufacturing Company to Huawei, for use in the Chinese company's HiSilicon chip-designing unit. Reuters was first to report this last month.

The news comes after a two-week period during which the administration discussed the fresh restrictions. Huawei was placed on a blacklist In May last year that makes it necessary for the company to obtain official clearance if it wants to buy goods made in the US that have more than 25% American content.

Additionally, the further tightening of rules may not be approved by US President Donald Trump who, last month, hinted that he did not favour such additional restrictions and said he wanted to make the US an easy place for other countries to buy products.

Articulating his opposition — on Twitter as usual — Trump said: "We want to sell product and goods to China and other countries. That’s what trade is all about. We don’t want to make it impossible to do business with us. That will only mean that orders will go to someplace else."

The placing of Huawei on the Entity List last May has not satisfied hardline American officials who are frustrated that it does not appear to have affected the company financially. The company's presence on the list was meant to cut it off from doing business with chip makers like Micron Technology, Intel and Qualcomm.

These companies have used loopholes in the regulations to continue to sell to Huawei from overseas locations. If the US wanted to push further, it would have to alter the Foreign Direct Product Rule which places some goods made abroad under US regulations if they are based on American technology or software.

The WSJ said the plan now was to draft new rules and put them into operation before the semiconductor industry had a chance to lobby for changes to get them revised or diluted.

Asked for comment, a TSMC spokesperson said: "TSMC [is] using its leading edge technology, [to] support most of the leading edge products globally today. The company is unable to answer hypothetical questions and does not comment on any individual customer.”

Comment has also been sought from Huawei.

Earlier this month, the US gave Huawei an exemption to do business in the country up to 15 May, ahead of the last extension which ends on 1 April.

Washington has campaigned for more than two years to try and push countries it considers allies to avoid using 5G equipment from Huawei in their networks. Thus far, only Australia and Vietnam have said openly that they would follow the US' lead.

Japan, South Korea and Poland have indicated that they are likely to toe the US line, but have yet to make public pronouncements about what policy they would follow.

The UK broke ranks with the US in January, saying it would allow Huawei to supply up to a third of equipment for non-core parts of its 5G networks. Since then, India, the UAE and Cambodia have said they would allow Huawei to participate in 5G trials.

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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