Last week, The United States Government new restrictions on Chinese Tech Giant Huawei. These new restrictions limit the ability of Huawei to use technology made by America for the design and manufacture of its semiconductors abroad. A statement by commerce secretary Wilbur Ross stated that “There has been a very highly technical loophole through which Huawei has been able to use U.S. technology” clearing indicating that the move aims to plug in the loopholes exploited earlier. The statement extended to say “We never intended that loophole to be there.”
The new restrictions are threatening for Huawei as United States makes most of the manufacturing equipment and chip design for world’s semiconductors. Hence, it can also be considered that this new rule is going to affect many non U.S. producers which used to export to Huawei. As per the new rules, a license is required to be obtained from U.S. officials for anyone willing to make foreign semi-conductors for exporting to Huawei. The new restriction is also on Huawei associate HiSilicon which makes chips which is used in semiconductors used for military uses. As stated by the Commerce Department, the non U.S. manufacturers will get a grace period of 4 months.
If we look at the past restrictions, the U.S. government made a rule that disallowed U.S. firms to use any Huawei technology and to provide any technology to Huawei without governments consent. It even went on to state that doing this will be a national security risk. A response from Huawei is still awaited against the new set of restrictions. As expected, the Chinese government reciprocated to this move by threatening to take actions against American companies such as Apple, Qualcomm, and Cisco. Obviously, this particular aspect of the Trumps strategy of suppressing Chinese development has become a thorn in the flesh for China.