US moves to cut off China's Huawei from global chip suppliers

US officials said Huawei had been circumventing sanctions. PHOTO: AFP

WASHINGTON (AFP) - US officials moved Friday (May 15) to cut off Chinese tech giant Huawei from global chipmakers, ramping up sanctions on the company seen by Washington as a national security risk.

The Commerce Department said it was broadening its sanctions enforcement to include semiconductor designs that are developed using US software and technology.

Officials said Huawei had been circumventing sanctions by obtaining chips and components that are produced around the world based on US technology.

"This announcement cuts off Huawei's efforts to undermine US export controls," the Commerce Department said in a statement.

The department said it would "narrowly and strategically target Huawei's acquisition of semiconductors that are the direct product of certain US software and technology."

Commerce Secretary Wilbur Ross said in a statement that even as Huawei seeks to develop its own components in response to US sanctions, "that effort is still dependent on US technologies."

The move is the latest aimed at Huawei, one of the world's biggest tech and smartphone firms, which US officials say has been stealing American trade secrets and aiding Beijing's espionage efforts.

Huawei has denied links to the Chinese government, and the sanctions have heightened US-China trade tensions.

The latest action "puts America first, American companies first and American national security first," a senior Commerce Department official said in a statement.

US officials said the new rules would have a 120-day grace period. After that, any chips destined for Huawei or its affiliates would be required to have a licence.

A senior State Department official, who joined a call with journalists on the new actions, said the move would not necessarily deny Huawei access to these products but require a licence allowing Washington to keep track of the technology.

"One shouldn't jump to conclusions on what the impact will be," the official said.

In a separate announcement, US officials announced the Taiwan Semiconductor Manufacturing Corporation intends to invest US$12 billion (S$17 billion) in a US-based nanometer semiconductor foundry.

The deal "is a game changer for the US semiconductor industry that will bolster American national security and our economic prosperity," Secretary of State Mike Pompeo said in a statement.

Officials said the two announcements were unrelated. But analyst Patrick Moorhead of Moor Insights & Strategy said both were related to efforts to cut off China and Huawei from key US technologies.

"The US is concerned with 'feeding' Huawei, who they consider a threat, with US technologies that could turn around and spy on them or their allies," Mr Moorhead said.

"With TSMC, the fear was that China could physically or electronically intrude on Taiwan-based TSMC."

Washington last year said it would blacklist Huawei from the US market and from buying crucial American components, though it has extended a series of reprieves to allow US businesses that work with Huawei time to adjust.

On Friday it extended this reprieve by another 90 days but said these exceptions are not likely to be extended further.

The Commerce Department senior official said the grace period was aimed at easing the transition for those using Huawei equipment but warned that "entities who rely on that equipment are urged to make preparations" to transition away from that by August.

Washington has been especially active in aiming to keep Huawei from developing 5G or fifth generation wireless networks in the US and allied countries, claiming these systems would be a security risk.

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