US officials have approved hundreds of millions of dollars in licensing applications to allow the blacklisted Chinese telecommunications company Huawei to buy two chips for its growing auto parts business.
Huawei enjoys the title of being the largest manufacturer of equipment related to telecommunications. The company was imposed sales restrictions, specifically the sale of chips and other gadget components, which are utilized for their smartphone business and network equipment by the Trump organization. Due to this restriction, the company has been lately struggling immensely.
The Biden administration has been strengthening its tough line of exports to Huawei, refusing to sell to its chips for 5G equipment or supporting 5G equipment. Huawei is currently shifting its business to products that are less susceptible to the US trade ban.
Automotive chips are generally considered uncomplicated, which lowers the barriers to approval. A person familiar with the licensing approvals stated that the government is issuing chip licenses for other vehicles that may have 5G capabilities.
When asked about car licenses, a U.S. Department of Commerce spokesperson stated that the government continues to implement the licensing policy, “restricting Huawei’s access to goods, software, or technology that may harm the interests of U.S. national security and foreign policy.”
The spokesperson also said that the Ministry of Commerce must not disclose the approval or rejection of the license. The United States has spared no effort to restrict the growth of Huawei’s key communications-related businesses on the grounds that it poses a threat to national security and foreign policy interests.
After placing Huawei on the U.S. Department of Commerce’s trade blacklist in 2019 and prohibiting the sale of U.S. products and technologies to the company without special permission, the U.S. strengthened controls last year and restricted the sale of U.S. equipment made abroad to it.
The United States has also mobilized allies to boycott Huawei and exclude it from the 5G network on the grounds of spying and suspicion. Huawei denies these allegations.
The US sanctions forced Huawei to sell a large portion of its once-dominant mobile phone business. Coupled with the fact that new growth areas are not yet fully mature, Huawei’s revenue in the first half of 2021 has recorded a record decline. Huawei’s rotating chairman Xu Zhijun announced at the Shanghai Auto Show earlier this year that he would cooperate with three Chinese state-owned automakers, including BAIC Group, to provide the “Huawei Inside” smart car operating system. This highlights the company’s shift to the field of smart cars.
When talked with a source associated with the matter, it said that suppliers were provided with full authority to sell of millions of dollars as chips to Huawei, who further asked the suppliers to apply again in the hope of getting an increase in the value, for instance, to around 1-2 billion. This also shows Huawei’s grand ambitions in this field.
Richard Barnett, chief marketing officer of Supply Frame, a global electronic product consulting company, said that Huawei is in the “early stage” of investing in the US$5 trillion automotive markets, which has huge growth potential both in China and abroad.