US May Block Global Chip Sales To Huawei Via Revised Rule

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The Huawei saga heats up. A new proposal on the table suggests the US may block chip sales to Huawei by revising US regulations to do so.

The US is considering the idea of revising its Foreign Direct Product Rule (FDPR) to block global chip sales. The regulation says that any product based on US technology must comply with US regulations. Taiwan Semiconductor Manufacturing Company (TSMC), for example, finds itself in the crosshairs. The reason pertains to the fact that TSMC uses US chipmaking equipment to produce its chips. TSMC is one of Huawei's biggest chip sellers. As such, TSMC stands to lose along with Huawei if the proposal goes through.

The new revision to the FDPR would also require chipmakers, like other companies, to receive a US license before selling to Huawei if they're using US chipmaking equipment.

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Rule Revision: Continuing the Huawei Ban

The Foreign Direct Product Rule revision continues the Huawei saga as one of the major acts against Huawei since last year. In May 2019, US President Donald Trump placed the company on the US Entity List and forbade companies from buying and selling to Huawei. Since then, Trump has been meeting for talks with Beijing, with foreign trade deals delaying the taxation on Chinese/American goods. And yet, in the midst of that, the Trump administration has been sitting quiet. Trump has gone so far as to say at one point that Huawei isn't on the negotiating table just yet.

Despite Trump's refusal to move forward, Congress isn't sitting still. Congress has approved funds for small American carriers to upgrade their telecom equipment and ditch Huawei. Congress has considered legislation that would ban any company from making money from patents while under a US ban (including Huawei). With this proposal, Congress would close another loophole instead of waiting for Huawei to exploit it. The Shenzhen manufacturer is currently suing American carrier Verizon Wireless for network trade theft.

The US resolve against Huawei: greater than ever

Some say that the US has been on the fence about blocking Huawei because Huawei would take its money and business elsewhere, particularly to China. And yet, that doesn't seem to be the case, at all. Recently, the US Government gave Huawei another reprieve, though it is only 45 days instead of the standard 90 days from past reprieves. Huawei doesn't have much longer to access Android software or goods and services before the ban arrives in full force.

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The 45-day reprieve was for small American carriers rather than for Huawei. Small US carriers must replace their Huawei telecom equipment by way of US subsidies to avoid complete network shutdown when the Ban takes place.

American legislative measures and smaller reprieves signal that the jig is up. Perhaps Trump hasn't had a change of heart about Huawei; maybe his stance toward Huawei has been for the benefit of American companies until stricter measures could be taken — a reinforcement of his MAGA slogan.