US targets Huawei with tighter chip export rules

The US has announced new export controls aimed at limiting Chinese technology giant Huawei's access to semiconductor technology.

The new rule bars semiconductor-makers that use US technology and software in chip design from shipping to Huawei without US government permission.

It is the latest US action to target Huawei, which US officials view as a national security threat.

China threatened to retaliate against US tech firms.

The tightened controls come a year after the US moved to cut off Huawei, the world's second largest smart phone maker, from access to US-made semiconductor chips, which form the backbone of most computer and phone systems.

In response, the company and others in China accelerated efforts to manufacture such chips domestically.

• Could blacklisting China's AI champions backfire?

US Commerce Department Secretary Wilbur Ross said that those efforts were "still dependent on US technologies", and accused Huawei of taking steps "to undermine" earlier export controls.

"This is not how a responsible corporate citizen behaves," Mr Ross said. "We must amend our rules exploited by Huawei... and prevent US technologies from enabling malign activities contrary to US national security and foreign policy interests."

The new US rule, to be published on Friday, applies to foreign-made items, using US technology. It exempts equipment or software made or shipped within the next 120 days - a move meant to limit economic harm.

In a background briefing for reporters, the US said officials would consider licence applications to do business with Huawei on a "case by case" basis.

"This is a licensing requirement. It does not necessarily mean that things are denied," a senior State Department official said. "We tend to approach Huawei with some concern but this is a measure that gives the US government visibility into what is moving."

Also on Friday, the US extended waivers that allow US companies, many of them rural internet providers, to use some kinds of Huawei technology for another 90 days.

'Cut off the relationship'

Donald Trump, who is campaigning for re-election in November, has stepped up his attacks on China in recent weeks, blaming it for the spread of Covid-19.

This week, he moved to restrict US government pension funds from investing in Chinese companies. He said on Wednesday he could "cut off the whole relationship".

The US has said Huawei's technology could be used for spying by the Chinese government.

It has pressured allies, including the UK and Germany, to bar Huawei from their networks and sued the company for technology theft and doing business with Iran, in violation of US sanctions.

Huawei has contested the US government's claims and said American efforts are likely to backfire, hurting the ability of US tech firms to do business.

China on Friday threatened to place US companies on an "unreliable entity list", according to a report in the country's Global Times.

Making life difficult

As well as putting pressure on its microchip business, the US trade blacklist has made life very difficult for Huawei's smartphone business.

The Wall Street Journal recently reported that Huawei's handset shipments outside of China had dropped by 35%, threatening its position as the world's second-biggest handset maker.

Its latest phones can no longer embed Google Mobile Services, which include important features such as maps and the Google Play app store.

Huawei has tried to work its way around this by providing its own Huawei Mobile Services. But its App Gallery is missing a majority of the most-popular apps found on Android in the UK and US.

Luckily, Huawei may have found a loophole.

It has been re-releasing some of its previous smartphones with ever-so-slightly updated hardware, complete with the Google Mobile Services.

Its latest is the P30 Pro New Edition. It looks almost just like the original P30 Pro, which was released before the US trade blacklist. But the New Edition has more memory and storage - and now comes in silver. And because it's technically a P30 Pro, rather than a P40 Pro, it also comes with the full suite of Google services.

Huawei says it will be released in the UK on 3 June. How long it can use that work-around remains to be seen.