Why Some U.S. Tech Firms Are Shipping Parts to Huawei Despite Ban

Why Some U.S. Tech Firms Are Shipping Parts to Huawei Despite Ban

The U.S. tech firms innovate at scale, now legally. Yes, they have figured out how to do business with Huawei, the Chinese company which was largely banned by the U.S. government. Intel, Micron, and others are shipping to Huawei. The fact is this: some U.S. tech IPs are held in tax-havens outside U.S. They can call those entities non-U.S. entities and legally do business with Huawei. Yes, they have thrown the laws back to the U.S. government – and saying, if you think I am breaking the law, sue me, and I will explain while this Irish company that holds our IP should not comply with the U.S. ban.

U.S. tech firms, such as chipmakers Micron and Intel, have decided there are legal ways to continue supplying Huawei, to an extent, despite the American blacklisting of the Chinese telecoms giant. The loophole? The U.S.-headquartered companies are able to classify their technology as foreign, thanks to their overseas subsidiaries and operations (Fortune)

Now, the U.S. government will have to sue Intel Ireland, not Intel Corp. since some of these subsidiaries are structured in ways that give them “loose” legal separations even though financially they are entwined. Provided Intel Ireland is complying with Irish laws, they have openings to work with Huawei while complying with the general U.S. Export Control rules. These companies are very confident as some have even started shipping to Huawei without clearance from U.S. firm.

American technology companies have resumed selling certain products to Huawei Technologies Co. after concluding there are legal ways to work with the Chinese telecom giant in spite of its inclusion on a Trump Administration blacklist.

Micron Technology Inc., the largest U.S. maker of computer memory chips, said on Tuesday that it had started shipping some components to Huawei after its lawyers studied export restrictions. Intel Corp., the largest microprocessor maker, has also begun selling to Huawei again, according to a person familiar with the matter. It’s not clear how many other suppliers have reached the same conclusion.

The lesson is this: when you make rules, typically by say 10-15 people, expect a factor of 10 lawyers figuring out how to get around the rules. It seems the brilliant American lawyers have figured out Trump Administration ban on some Chinese companies. You cannot stand between American companies and more U.S. dollars.

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