Huawei may be cut off from U.S. suppliers under the Biden administration

According to people familiar with the matter, the Biden administration is considering entirely cutting off Huawei Technologies Co. from U.S. suppliers due to national-security concerns.

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In an effort to counter China's industrial policy, U.S. policy makers seek to counter China's industrial policy, which they say compromises Western interests if the move happens.

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A list of foreign companies deemed a national-security threat was compiled by the Department of Commerce in 2019 that included Huawei. U.S. companies were later permitted to sell tech to Huawei as long as it wouldn't compromise national security, according to the Commerce Department. 

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In spite of the fact that no decision has been made, the Biden administration is now considering whether to stop granting such licenses. Bloomberg and the Financial Times previously reported on the deliberations.

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Huawei's lineup of smartphones and personal computers are exempt from the U.S. blacklist due to less advanced chips. U.S. restrictions have prevented Huawei from offering a 5G-enabled smartphone. 

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There was no comment from Huawei. Its products are not a national-security risk, according to the world's largest telecom equipment company. 

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The Chinese foreign ministry's spokeswoman Mao Ning condemned the possibility of any new actions being taken against Huawei at Tuesday's daily press briefing in Beijing. According to Mao Ning, such action would violate the principles of market economy and international trade rules, undermine international confidence in the U.S. business environment, and amount to pure sci-tech hegemonism.

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According to one person familiar with the matter, U.S. officials have signaled to Qualcomm Inc. and Intel Corp. that now is the time to wind down sales to Huawei. There was no comment from Intel or Qualcomm.

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According to this person, keeping stricter controls on Huawei will not only prohibit direct dealings with the company but also prohibit exports to other companies and intermediaries that supply Huawei. As U.S. components are used internationally, that policy could suppress Huawei's international business.

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Neither the Commerce Department nor its representatives publicly comment on specific companies or their discussions.

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We continually assess our policies and regulations and communicate regularly with external stakeholders, working closely with our interagency export control partners at the Departments of Energy, Defense and State.

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While Huawei said late last year that it had exited "crisis mode," its placement on the entity list cut into its bottom line. However, International Data Corp. does not list Huawei among the top five handset providers in China last year. Those five vendors, including Apple Inc. and Chinese manufacturers, accounted for about 84% of smartphone shipments in 2022, according to IDC. 

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Outright bans on Huawei exports may have limited direct effects on the market due to Huawei's waning U.S. business, but they could signal further deterioration in U.S.-China relations. 

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Since Huawei was added to the entity list, U.S. policy makers have grown increasingly concerned about China's policies and its potential threat to Western interests. A major concern for many policy makers is that China controls critical segments of the US telecommunications industry, resulting in disruption of global supply chains. 

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Biden's appointment of Thea Kendler as assistant secretary for export administration at the Department of Commerce, a position critical to controlling exports to China, underscored those concerns. Thea Kendler was an attorney in the criminal case against Huawei and its Chief Financial Officer Meng Wanzhou.

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Washington and Beijing have traded punitive policies in recent months, escalating diplomatic tensions. Huawei export controls have been under consideration by the Commerce Department. To prepare for the publication of a final rule in the coming months, an interim final rule was published in September.