Huawei working to mitigate impact of US sanctions

By Staff Writer | 17 May 2019 at 19:40hrs
Huawei says it will continue to push ahead with its 5G strategy, after the US Commerce Department announced it will ban the technology company from buying parts and components from US companies without government-approved licenses.

US president Donald Trump, citing national security concerns, signed an executive order that's expected to bar US imports of equipment made by Huawei and another Chinese company, ZTE Corp.

And the Commerce Department said Huawei would be forbidden to buy from American companies, some of which supply computer chips for its products.

In a Federal Register notice released on Thursday, the Commerce Department said the new curbs would apply to Huawei and 67 of its affiliates scattered across 26 countries from Germany to Madagascar, Bloomberg said.

Huawei said in a statement that it is against the decision made by the Bureau of Industry and Security (BIS) of the US Department of Commerce.

"This decision is in no one's interest. It will do significant economic harm to the American companies with which Huawei does business, affect tens of thousands of American jobs, and disrupt the current collaboration and mutual trust that exist on the global supply chain.

"Huawei will seek remedies immediately and find a resolution to this matter. We will also proactively endeavour to mitigate the impacts of this incident.

Glenn Schloss Huawei VP corporate Communications told BusinessTech in Hong Kong, that the company will push ahead with its 5G strategy.

"It is business as usual," he said, noting that Huawei is keen to negotiate with the US, in its efforts to bring the technology into the country. He pointed out that the group does not have a significant presence there.

"We want to demonstrate the lead we have in 5G," Schloss said, adding that it is between 6 months to a year over the market.

The Trump administration is pulling out the big guns in its push to slow China's rise, with potentially devastating consequences for the rest of the world, Bloomberg said.

If the US blocks the sale to Huawei of critical components such as semiconductors, it could cripple Huawei's businesses, depress the business of American chip giants from Qualcomm Inc. to Micron Technology Inc, and potentially disrupt the rollout of critical 5G wireless networks around the world.

The Commerce Department said Wednesday it will soon put Huawei on an "Entity List" – meaning any US company will need a special license to sell products to the world's largest networking gear maker and second-largest smartphone brand.

Commerce Secretary Wilbur Ross told Bloomberg Television the measures limiting its access to US components become official on Friday.

Separately, he said President Donald Trump had given his department 150 days to establish a process to screen US companies' purchases of equipment from the Chinese firm, and other equipment providers with which officials have concerns.

The threat is likely to elevate fears in Beijing that Trump's broader goal is to contain China, igniting a protracted cold war between the world's biggest economies. In addition to a trade fight that has rattled global markets for months, the US has pressured both allies and foes to avoid using Huawei for 5G networks that will form the backbone of the modern economy.

Ross dodged questions about whether the new moves against Huawei could lead to a negotiation with the company or the Chinese government.

He insisted the growing campaign against Huawei remained a separate matter from broader trade negotiations between the US and China, which have stalled in recent days.

"The purpose we have in mind here is we think there is a significant danger to national security and to our foreign policy of the existing situation at Huawei," Ross said.

In notice published Thursday, the Commerce Department's Bureau of Industry and Security said the US was adding Huawei's affiliated companies around the world because they "pose a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States."

The US has long accused the telecommunications equipment giant of facilitating Chinese espionage and sought to convince allies not to purchase its equipment for new 5G networks. The Justice Department is prosecuting Huawei over accusations of bank fraud, technology theft and violating US sanctions against Iran.

Restrictions on sales "would be terrible for any Huawei supplier, and for the semiconductor industry at large," Chris Caso, a semiconductor analyst at Raymond James, wrote in a research note.

Companies like Huawei need their US suppliers, since Chinese manufacturers account for about only 3% of worldwide chip production, according to an estimate by Sanford C. Bernstein & Co Inc.



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