The US Considers Closing Huawei Chip Ban Loopholes

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The new Huawei chip ban rule to keep the Chinese OEM in check has some loopholes the US may close in the near future.

US considers closing Huawei chip ban loopholes in new rule

The new rule mandates that global chipmakers using American technology must request a selling license from the Federal Government before selling chips to Huawei. However, the new rule is lacking, according to some US regulators.

First, the new chip ban only applies to Huawei-designed chips. Next, the rule only prohibits shipments to Huawei, not shipments to Huawei clients. With these two loopholes, Huawei could still ship, say, TSMC chips to clients that it doesn't design. It wouldn't have to receive chips to ship them and still make a profit.

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Why patch up these two loopholes?

Some would say that, with the current US rule, Huawei cannot do business with global chipmakers. Since the company cannot design its chips with chipmakers, the company's fortunes will decline. That is essentially what the new chip ban should do, without amendment. There is no need, some say, to fix the loopholes.

And yet, the company may use loopholes to find a workaround to the new ban. Huawei has done this in the past. For example, Huawei has purchased from US suppliers under codenames such as Skycom (Iran), DirectPoint (Sudan), and Canicula (Syria). So, Huawei isn't a stranger to finding workarounds.

New rule patches holes of the original ban

The original ban against Huawei from last May (2019) prohibits Huawei from buying from American companies that don't have a special US license or selling its own products. At the time, however, only US chipmakers were under US regulations. With the new ban, however, global chipmakers using US technology must now secure a US license before doing business with Huawei. The rule still needs some work, however, which is why another revision is necessary.

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As of last May, US President Donald Trump issued an Executive Order against the Chinese OEM. In less than a week's time, Google revoked Huawei's Android license. Since then, Huawei has had a few license extensions to continue updating its current Android smartphones. Yet, Huawei is no longer an Android OEM and can no longer ship Android smartphones bearing Google's mobile operating system.

Huawei USA Chief Security Officer Andy Purdy says that the latest US ban on Huawei is nothing more than an attack on China. America's real issue is with China, Purdy says in a recent Bloomberg interview.