The United States has taken further steps to curb China’s technological influence by revoking certain licenses for chip exports to Huawei, a Chinese tech giant.
The Commerce Department confirmed this development to CNBC on Tuesday, marking the latest move in the ongoing efforts to address national security concerns associated with China’s tech prowess.
A spokesperson for the Commerce Department highlighted the dynamic nature of national security threats emanating from China’s growing tech prowess, noting the need for continuous assessment and adaptation of export controls.
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While specific details regarding the revoked licenses were not disclosed, it was confirmed that certain exports to Huawei had been affected.
“We continuously assess how our controls can best protect our national security and foreign policy interests, taking into consideration a constantly changing threat environment and technological landscape,” a Commerce spokesperson said in a statement.
“As part of this process, as we have done in the past, we sometimes revoke export licenses,” the spokesperson said. “But we can confirm that we have revoked certain licenses for exports to Huawei.”
Huawei’s inclusion on a U.S. trade blacklist in 2019 prohibited American firms from supplying technology, including crucial 5G chips, to the Chinese company over national security concerns. Subsequent tightening of chip restrictions in 2020 extended these limitations to foreign manufacturers utilizing American chipmaking equipment, requiring licenses for semiconductor sales to Huawei.
The US has also created rules meant to restrict to China, the flow of advanced chips that can be used for AI.
Despite these restrictions, Huawei’s consumer business, particularly smartphones and laptops, has shown resilience, with the recent launch of the Mate 60 Pro smartphone winning market attention. Analysis by TechInsights, cited by CNBC, revealed the utilization of advanced chips from China’s leading chipmaker, SMIC, in the Mate 60 Pro, circumventing some of the U.S. sanctions aimed at impeding Huawei’s technological advancements.
U.S. chip firms such as Qualcomm and Intel, which supply components to Huawei, have acknowledged the potential impact of export restrictions on their operations.
Qualcomm anticipates a reduction in revenue from Huawei beyond the current calendar year, citing the development of Huawei’s own chips as a contributing factor. Similarly, Intel foresees the impact of new export restrictions on its revenue for the next quarter, highlighting the escalating tensions and uncertainties surrounding U.S.-China relations in the tech sector.
“While we have continued to sell integrated circuit products to Huawei under our licenses, we do not expect to receive product revenues from Huawei beyond the current calendar year,” Qualcomm said.
“Additionally, to the extent that Huawei’s 5G devices take share from Chinese original equipment manufacturers that utilize our 5G products or from non-Chinese OEMs that utilize our 5G products in devices they sell into China, our revenues, results of operations and cash flows could be further impacted.”
Meanwhile, Huawei’s aggressive expansion in the smartphone market, particularly with its Pura 70 series, launched in April, poses a significant challenge to competitors like Apple in China. Counterpoint Research data shows a substantial increase in Huawei’s smartphone sales, with iPhone sales dropping by 19.1% in the first quarter, while Huawei’s smartphone sales surged by 69.7%, as reported by Counterpoint Research.
Huawei’s net profit in 2023 increased by 144.5% compared to the previous year, reaching 87 billion yuan (approximately $12 billion). This growth was partly attributed to the sales of the Mate 60 Pro in China, as disclosed by the company in March.
Intel expects new export restrictions to China to impact its revenue for the next quarter, according to a new financial filing. Intel said its revenue for the second quarter of 2024 will still fall within the original range it outlined of $12.5 billion to $13.5 billion but below the midpoint.
Since 2019 when Huawei was placed on US trade blacklist, tensions between the US and China and the race to advance in cutting-edge technology have only intensified, especially with the rise of generative AI. This is the latest episode.