Here Are the Impacts of Trump’s Parting Actions Against Huawei
Before leaving the White House on Jan. 20, former President Donald Trump blasted one last political salvo out against Chinese telecommunications powerhouse Huawei by revoking licenses for specific U.S. companies to sell needed components to Huawei.
Now the Biden administration will have to review those latest actions taken by Trump against the company and then figure out what to do about Huawei in the future.
The latest revocations of licenses used by American companies to sell parts to Huawei were revealed by Reuters just before Biden took the oath of office and became the nation’s 46th president. Getting one such revocation letter was U.S. chipmaker Intel Corp., which supplies a variety of chips to the company, according to the report.
The Trump administration’s action continues what Reuters called “a long-running effort to weaken the world’s largest telecommunications equipment maker, which Washington sees as a national security threat.”
Huawei did not respond to a request for comment from EnterpriseAI about the government’s action. The U.S. Department of Commerce told Reuters that it continues to work with other agencies to “consistently” apply licensing policies in a way that “protects U.S. national security and foreign policy interests.”
Sources told the news agency that eight licenses were yanked from four companies under the action. “Companies that received the ‘intent to deny’ notices have 20 days to respond, and the Commerce Department has 45 days to advise them of any change in a decision or it becomes final,” reported Reuters. Appeals could be made for 45 days following the decisions.
Huawei has been on a U.S. Commerce Department “entity list” since May 2019, which restricts suppliers from selling U.S. goods and technologies to the company under Trump administration policies. “But some sales were allowed and others denied while the United States intensified its crackdown on the company, in part by expanding U.S. authority to require licenses for sales of semiconductors made abroad with American technology,” Reuters reported.
Complications for Huawei
Avi Greengart, principal analyst for Techsponential, told EnterpriseAI that the Huawei situation is not a simple one because it involves politics, supply chains and unintended consequences.
“Huawei’s infrastructure business was first targeted by U.S. security agencies well before the Trump administration took office due to fears that the company was owned by the Chinese government and its networking gear could be used to spy on American interests,” which the company denied, said Greengart. “At first, the U.S. government restricted U.S. agencies and, later, carriers, from purchasing Huawei gear. In the middle of a trade war with China, the Trump administration then prevented Huawei from getting access to U.S. technology.”
The government actions are taking a toll on Huawei, he said. “This not only handicaps Huawei's infrastructure group, but has severely limited Huawei's devices business. Last week's actions by the outgoing Trump administration are a reduction in exceptions to the original Entity List restrictions, not a new round of sanctions.”
And even if there were sound political or trade reasons to restrict Huawei's smartphone business, he continued, Trump's ban on access to U.S. technology poses the danger of unintended consequences.
“Take away Google Mobile Services (GMS), Google's Android software and services layer, and Huawei is investing over a billion dollars in creating Huawei Mobile Services (HMS) -- its home-grown equivalent,” said Greengart. “Take away access to Qualcomm, Intel and TSMC and China is forced to invest in building its own silicon infrastructure. In the short term, that may cripple Huawei’s Devices group. In the long term, it could make all of Huawei -- and the entire Chinese tech sector -- self-sufficient and more competitive.”
Because the Biden administration is just settling in less than a week after his inauguration, the Huawei situation will not get any attention initially since there are so many other pressing issues for its actions right now, said Greengart.
“The Biden administration has focused its initial energies on domestic issues and immigration; the earliest I expect to see any changes to China policy – if there are any – would be in February,” he said.
Questioning the Policies
One thing that puzzles Greengart about the U.S. government’s past actions against Huawei is that the U.S. has seemingly not made much of a distinction between Huawei's infrastructure and device businesses, he said. “Whatever the security merits of limiting Huawei's infrastructure business, I'm still waiting for someone to explain why it's a bad thing for Huawei to build smartphones using American-designed software from Google on American-designed silicon from Qualcomm.”
At the same time, “what is the issue with Huawei laptops using American-designed software from Microsoft on American-designed silicon from Intel?”
Another analyst, Charles King of Pund-IT, said he also has questions about the latest actions against Huawei.
“As we've seen in other cases and areas, the last-minute move against Huawei suppliers classifies as an attempt by a previous administration to embed policies in place, and make it difficult for the Biden administration to change or reverse them,” said King. “In political terms, such moves qualify as a past president thumbing his nose at the candidate and administration who beat him. It's hard to know what its practical effects will be.”
Ultimately, “the past administration's relations with China were so fraught and its misstatements and lies so commonplace that it's difficult to know the truth,” said King. “I expect the Biden administration will review it carefully. However, Huawei is a single piece of a highly complex puzzle involving the U.S. and China, along with vital industries and key allies. Whatever the final decision, I believe it will be made with greater deliberation and strategic clarity than what went into the previous administration's license revocations.”