Donald Trump in his last days as the President of the United States in an effort to further weaken Huawei, Chinese biggest telecom manufacturer includes a newer notification to the company’s suppliers including Intel on order to let them know it would be revoking certain licenses to sell to the Chinese company while also intending to reject dozens of other applications to supply the company.
Washington under the Trump administration continues to accuse for being a threat to the country’s national security while the President-elect Joe Biden prepares for his inauguration on Wednesday.
Both major players inn the new restriction – Huawei and Intel declined to make any comment about it. Even the Commerce said it couldn’t make any comment on specific licensing decisions but assured the department continues to work with other agencies in order to “consistently” apply licensing policies in a way that “protects U.S. national security and foreign policy interests.”
An email where the action is being documented was obtained by media outlet Reuters where its noted that the Semiconductor Industry Association on Friday made it known that the Commerce Department had issued “intents to deny a significant number of license requests for exports to Huawei and a revocation of at least one previously issued license.” Sources familiar with the situation, who spoke on condition of anonymity, said there was more than one revocation. One of the sources said eight licenses were yanked from four companies.
With this news, there as a triggered moderate profit-taking in some semiconductor related shares in Asia. A good example is with Samsung which fell 1.5% while Japan’s Advantest dropped 1.5% and Tokyo Electron also lost 0.8%.
Another Japanese brand is Kioxia Corp which had on of its license revoked according to sources close to the company.
The company, formerly known as Toshiba Memory Corp, said it does not “disclose business details regarding specific products or customers.” In the email of the Semiconductor industry association, it’s made known that the action spanned a broad range of products in the semiconductor industry while asking companies if they had ever received notices.
The email also noted that companies had waited for months over the license decisions and with the administration being swapped out for a newer one by Wednesday and dealing with the denials is a big challenge.
A spokesman for the semiconductor group did not respond to a request for comment.
Companies that received the “intent to deny” notices have 20 days to respond, and the Commerce Department has 45 days to advise them of any change in a decision or it becomes final. Companies would then have another 45 days to appeal.
Huawei had been on the entity list since Maya 2019 while also restricting the sales of its goods and services in the country and stopping suppliers from selling US goods and technology to the Chinese tech giant.
Even though some sales were allowed and others denied, the US government under the Trump administration continued to intensify its crackdown on Huawei which includes the US authority to require licenses for sales of semiconductors made abroad but with American technology.
There were about 150 pending licenses before the latest action which was worth about US$120 Billion worth of goods and technology that was held up due to various US agencies not being able to agree on if they should be granted.
Another $280 billion of license applications for goods and technology for Huawei still have not been processed, the source said, but now are more likely to be denied.
Intel Corp has received licences from U.S. authorities to continue supplying certain products to Huawei Technologies, an Intel spokesman said in September last year.
Products with 5G capabilities are said to be likely ruled out according to a rule back in August while the sales of less sophisticated technology would be decided on a case-by-case basis.
The United States made the latest decisions during a half dozen meetings starting on Jan. 4 with senior officials from the departments of Commerce, State, Defense and Energy, the source said. The officials developed detailed guidance with regard to which technologies were capable of 5G, and then applied that standard, the person added.
That meant issuing denials for the vast majority of the roughly 150 disputed applications, and revoking the eight licenses to make those consistent with the latest denials, the source said.
The U.S. action came after pressure from a recent Trump appointee in the Commerce Department, Corey Stewart, who wanted to push through hardline China policies after being hired for a two-month stint in the agency at the end of the administration.
One of the ways Huawei had been targeted by the US government includes the arrest of the company’s CFO Meng Wanzhou in Canada back in De. 2018 on a US warrant.
Meng had however denied every allegations about her as well as Huawei claiming they never spied and pleaded not guilty to the indictment which included charges of violating the US sanctions against Iran and conspiring to steal trade secrets from American technology companies.