Unseen impact of US sanctions on Huawei

The United States, in a move to curb China’s tech dominance, has revoked the licences that allowed Intel and Qualcomm to sell semiconductors to Huawei. This decision is the latest in a series of restrictions aimed at preventing Huawei from accessing US technology.

Since 2018, Western governments have been trying to reduce Huawei’s influence in domestic markets by restricting who can buy technology from the Chinese company. However, the latest US sanctions against Huawei have shifted the focus. Now, it’s not about what Huawei sells, but what it can buy.

The sanctions against Huawei in the US started with the 2018 National Defense Authorization Act, which barred the Defense Department from procuring certain telecommunications equipment or services from the company. The restrictions were later extended to executive branch agencies. In 2019, the Commerce Department blacklisted Huawei by placing it on the ‘Entity List,’ forcing the company to get US government approval to buy American technology.

Ripple Effect of Sanctions

The revocation of licences has brought Intel’s sales to Huawei into the spotlight. Despite the government’s restrictions, Intel was still shipping chips to Huawei, a fact that has drawn criticism from lawmakers. The outrage over the use of Intel CPUs in consumer electronics, however, seems less about protecting US military and intelligence superiority, and more about pursuing a policy of trade protectionism that imposes blanket restrictions on Chinese manufacturers.

While revoking export licenses could damage Huawei’s competitiveness, it could also hurt American chip-makers. The anti-China restrictions in the Trump and Biden era run counter to the free market principles that have been a hallmark of American trade policy for the last hundred years. Unless relations between the two superpowers change drastically, US sanctions will continue to burden Huawei and its would-be suppliers, marking a historical anomaly in the current political climate.

Others affected by these sanctions

Several companies have been affected by the US sanctions on Huawei. These include the following.

• Intel: The United States has withdrawn the licenses that permitted Intel to supply semiconductors to Huawei. This action could potentially have a negative impact on Intel’s operations.
• Qualcomm: Qualcomm, similar to Intel, had its license to supply semiconductors to Huawei rescinded. Qualcomm has been selling older 4G chips to handsets since obtaining a license from US officials in a previous year.
• TSMC: The Taiwan Semiconductor Manufacturing Company (TSMC), a significant chip manufacturer, was prohibited from supplying semiconductors to Huawei.
• ZTE: ZTE, along with Huawei, was declared a national security threat by the Federal Communications Commission (FCC) in a previous year. This prevents U.S. internet providers from using federal funds to purchase the tech companies’ equipment.

These sanctions not only affect Huawei’s competitiveness but could also potentially harm these US and international chip manufacturers.