The trade ban is still in effect for over a hundred non-US affiliates on the entity list
Why it matters: US companies have previously warned of the economic consequences of halting trade with companies like Huawei, who is one of their biggest clients for electronic components and software services. In a positive turn of events, it looks like the US will now allow several of these companies to continue their business with Huawei, which should bring some stability back to the tech industry.
Earlier this month, news broke that hundreds of companies have sent requests to US Commerce Secretary Wilbur Ross to allow them to restart their relationships with Huawei, who said that the Trump administration was considering the idea of honoring “quite a few” of them.
The Commerce Department has officially started issuing licenses again for some of these companies to do business with Huawei. The Chinese giant has been one of the biggest buyers of hardware and software, having spent $11 billion in 2018 before the trade ban came into effect.
Huawei has had to release its latest smartphones — the Mate 30 Pro and the foldable, the Mate X — with an open-source version of Android and no Google apps pre-installed, as Google was forced to comply with the US restrictions on exports to Chinese entities. We don’t know yet if this particular trade ban has been lifted, but this could mean a lot for Huawei’s bottom line moving forward.
So far, the company has reported strong sales numbers that show healthy year-over-year growth of 26 percent. The Trump administration is close to signing a phase one trade deal with China to end the current trade war that has shaken the tech industry, and in the meantime, it will grant temporary, 90-day licenses to Huawei.
The way this works is that companies who have been allowed to deal with Huawei will have to follow a “Know Your Customer” guidance to ensure that national security isn’t at risk when they negotiate their exports.
The Semiconductor Industry Association said in a statement that it welcomes “the Administration’s approval of export licenses for commercial semiconductor technologies that do not pose national security concerns. Sales of these non-sensitive commercial products help ensure the competitiveness of the U.S. semiconductor industry, which is essential to national security.” The trade group further added that it hopes to see these approvals continue as quickly as possible. However, Commerce Secretary Wilbur Ross said during the annual briefing of the Overseas Security Advisory Council that he is “genuinely frightened by what we have learned from our investigations of Huawei and ZTE.”
US officials are still unsure if they should continue to allow the two companies to supply carriers with cellular infrastructure for remote areas in the country. At the same time, Ross notes “you can’t cut the local people in the rural communities out of telephones,” so Huawei will be allowed to continue a limited number of these transactions.
As for other Chinese companies on the entity list — and Huawei’s 115 non-US affiliates in particular — the official word is that the trade ban for them is still in place, at least for the time being.
Credits to Adrian Potoroaca of TechSpot