US Cracks Down On Huawei’s Access To Chips

The Trump Administration has moved to tighten chip export screws on China, further restricting access to U.S. advanced semiconductor manufacturing gear by adding more Huawei Technologies affiliates to its list of required licensees.

Caught unawares, the U.S. semiconductor industry groups expressed surprise at what one executive called the administration’s “sudden shift” away from a narrower approach to controlling chip gear exports.

The U.S. Commerce Department said Monday (Aug. 17) it will add 38 Huawei affiliates to its Entity List of companies required to obtain export licenses to purchase advanced U.S. chip technologies. The expanded list follows a May decision to slap stiffer U.S. export controls on American chip design software and manufacturing equipment. The new rules specifically target Huawei, its HiSilicon chip unit and other affiliates in an attempt to cut off access to leading edge chip technology.

The moves are part of the looming technology Cold War between the two superpowers as Beijing seeks to wean itself from dependence on western technology though well-funded “Made in China” initiatives such as an indigenous chip industry.

U.S. trade groups such as the Semiconductor Industry Association (SIA) and SEMI, which represents North American IC equipment makers, have expressed concern about being cut out of the booming Chinese electronics market. Lately, however, they had muted opposition to stiffer U.S. export restrictions.

The U.S. edict also leaves unresolved how the stricter U.S. exports controls would affect Taiwan Semiconductor Manufacturing Co., the world’s largest foundry and dominant supplier of fab services to Huawei.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” Commerce Secretary Wilbur Ross said in announcing the expanded Entity List.

In response, John Neuffer, SIA’s president and CEO, said the group was reviewing the expanded export rules but warned they would “bring significant disruption” to the U.S. chip industry.

“We are surprised and concerned by the administration’s sudden shift from its prior support of a more-narrow approach intended to achieve stated national security goals while limiting harm to U.S. companies,” Neuffer added. “We reiterate our view that sales of non-sensitive, commercial products to China drive semiconductor research and innovation here in the U.S., which is critical to America’s economic strength and national security.”

Nevertheless, the amended Entity List further limits Huawei’s ability to export chips developed or produced using U.S. EDA and other software tools as well as advanced lithography and IC manufacturing equipment.

The expanded list includes Huawei affiliates in 21 countries spanning Asia, Africa, Central and South America as well as Europe.

“Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests,” Ross alleged. “This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

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