Huawei Struggle Continues; Biden Restricts 5G Components Trade

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Huawei has been a pioneer in the 5G revolution, at least in China. Following the ban and the lawsuits, Huawei has been losing ground in the global market. It looks like the Chinese company has faced another blow, this time from the newly constructed Biden administration.

Huawei Struggle Continues; Biden Restricts 5G Components Trade

 

The Biden administration has further tweaked the licenses for companies selling to Huawei. The POTUS has restricted companies from supplying components that can be used with 5G devices, Reuters reports. The new amendment could further disrupt the already existing contracts with Huawei that were drafted under previous licenses.

Huawei Troubles Continue

Looking back, the trouble with Huawei and the US surged during the previous Trump administration. Back in January, the Trump administration drafted a law that would deny 116 licenses with face values adding up to USD 119 billion (around Rs. 864,960 crores). Instead, the administration only approved four licenses worth USD 20 million (around Rs. 145 crores).

Huawei Struggle Continues; Biden Restricts 5G Components Trade

The denied licenses were mainly categorized into handset, memory, network applications, and other devices. According to the document by the Commerce Department in the US, the Trump administration approved licenses for companies to sell around USD 87 billion (around Rs. 632,360 crores). But that's about to change again.

Biden Administration Restricts Selling To Huawei

From the looks of it, the Biden administration has further tightened the export licenses to Huawei over national security concerns. The latest development highlights older licenses that are made more consistent with tougher licensing policies.

Huawei Struggle Continues; Biden Restricts 5G Components Trade

 

The Reuters report further notes the amended licensed items may not be used "with or in any 5G devices". In other words, this simply restricts suppliers from providing items that may be used into a 5G device, even if the device has nothing to do with 5G functioning.

Furthermore, another revised license was not authorized for use in military, critical infrastructure, enterprise data centers, 5G, space applications, cloud, and so on. Some of these "items must have a density of 6 gigabytes or less and other technical requirements." This, effective from March 8, notes the report.

How Will This Impact Sellers?

Huawei Struggle Continues; Biden Restricts 5G Components Trade

The tensions between the US and China have been on the rise for a while now; even more after the coronavirus pandemic and China's crackdown on Hong Kong. The newly amended restrictions will surely hurt suppliers in the US. However, it will also bring in an equal group between companies as some have received licenses under less restrictive policies.

With the new rule in place, Huawei or customers must implement a parts control plan and make inventory records available to the US government upon request. This extends to both revised licenses and also those acquired before the export. Further, companies that are placed on the trade blacklist over national security and foreign policy worries will likely face a standard of denial.

Huawei has declined to comment on the new development. Plus, the US Commerce Department spokesperson has declined to comment on the new amendment, citing the licensing information is subject to confidentiality.

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