According to two people familiar with the matter, the license applications for Huawei, China’s blacklisted telecom company, have been approved by US officials. These are worth millions of dollars and will enable the company to purchase chips for its expanding auto component business. The largest telecommunications equipment maker in the world, Huawei has been struggling due to the trade restrictions the Trump administration had imposed on the sale of chips and other components used in its smartphone and network gear business.
The hardline on exporting to the company has been reinforced by the Biden administration, as they have denied licenses for selling chips to the company for use in or with its 5g devices. However, people familiar with the application process stated that in recent months and weeks, the US has granted licenses that authorize suppliers to sell Huawei chips that are for vehicle components, such as sensors and video screens. This approval comes as Huawei is shifting its businesses towards items that may not fall under the US trade bans. The bar for approval is low for auto chips because they are not regarded as sophisticated.
A person close to the license approval matter said that the government is approving licenses for chips in vehicles that may boast other components having 5g capability. A spokesperson for the US Department of Commerce said that the government would continue to apply licensing policies consistently for restricting Huawei’s access to software, commodities, or technology for those activities that could harm the US foreign policy or national security interests. The person also said that the Commerce Department is not permitted to disclose license denials or approvals. As for Huawei, a company spokeswoman did not comment on the licenses.
However, she did add that the company was positioning itself as a provider for new components for intelligent connected vehicles and their goal is to assist OEMs in building better vehicles. The US cited threats to the country’s foreign policy interests and national security for going to great lengths to slow down the key communications-related business of Huawei. In 2019, the company was placed on the trade blacklist of the US Commerce Department. This meant that the company couldn’t be sold any US goods or technology without a special license.
Last year, restrictions were given a boost as the US limited the sale of chips made with US equipment abroad. In fact, there was also a campaign for getting allies to eliminate Huawei from their 5G networks due to spying concerns. These allegations have been denied by Huawei.
In the first half of 2021, Huawei saw its biggest-ever drop in revenue, as the US restrictions pushed the company into selling a major portion of its handset business that had once been dominant and new growth areas haven’t matured as yet. Highlighting the company’s shift into smart cards, the rotating chairman of the company, Eric Xu, announced deals with three Chinese carmakers owned by the state, which include the BAIC Group, earlier this year.
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