The Biden administration has stopped approving renewal of licenses to some U.S. companies that have been selling essential components to the Chinese company, according to two people familiar with the matter. Neither was authorized to comment publicly on the sensitive matter and they spoke on the condition of anonymity.
The company, which makes network equipment and smartphones, has been on the U.S. Commerce Department’s entity list, which comprises those subject to licensing requirements, since 2019. It has been allowed to buy some less advanced components. But the new restrictions could cut off Huawei’s access to processor chips and other technology, as large U.S.-based companies such as Intel and Qualcomm are forced to wind down business with it.
Bloomberg News and the Financial Times first reported the administration move.
Huawei Technologies Ltd., China’s first global tech brand, is at the center of a conflict between Washington and Beijing over technology and security. U.S. officials say Huawei is a security risk and might facilitate Chinese spying, an accusation the company denies.
“China is gravely concerned about the reports,” said a foreign ministry spokeswoman, Mao Ning. She accused Washington of “over-stretching the concept of national security and abusing state power” to suppress Chinese competitors.
“Such practices are contrary to the principles of market economy” and are “blatant technological hegemony,” Mao said. The White House and Commerce Department declined to comment about specific deliberations regarding Huawei.
“Working closely with our interagency export controls partners at the Departments of Energy, Defense and State, we continually assess our policies and regulations and communicate regularly with external stakeholders,” the Commerce Department said in a statement. “We do not comment on conversations with or deliberations about specific companies.”
The move to halt licenses for Huawei comes after GOP Rep. Mike McCaul, chairman of the House Foreign Affairs Committee, announced earlier this month that the committee would conduct a 90-day review of the Commerce Department’s Bureau of Industry Security. McCaul said he was ordering the review because the agency had not been responsive to two-year-old requests for information on export control licenses that the agency has granted for China.
In a letter to Commerce Secretary Gina Raimondo this month, McCaul said the agency had “failed to uphold its legal obligation to produce requested documents and information.” McCaul on Tuesday called reports that Commerce is halting exports “a positive step” and called on the department to declare it a permanent decision.
Mao said Beijing would “defend the legitimate rights” of its companies but gave no indication how the government might respond. Beijing has made similar declarations after past U.S. action against its companies but often does nothing.
The ban on sales of advanced U.S. processor chips and music, maps and other services from Alphabet Inc.’s Google unit crippled Huawei’s smartphone business. The company sold its low-end Honor smartphone brand to revive sales by separating it from the sanctions on its corporate parent.
The Commerce Department agreed to grant export licenses to U.S. companies to allow them to sell less-advanced chips and other technology to Huawei that was deemed not to be a security risk. That followed complaints suppliers would lose billions of dollars in annual sales.
Huawei scrambled to remove U.S. components from its network and other products and has launched new business lines serving factories, self-driving cars and other industrial customers. The company hopes those are less vulnerable to U.S. pressure.
Huawei says its business is starting to rebound.
“In 2020, we successfully pulled ourselves out of crisis mode,” Eric Xu, one of three Huawei executives who take turns as chairman, said in a December letter to employees. “U.S. restrictions are now our new normal, and we’re back to business as usual.”
Last year’s revenue was forecast to be little-changed from 2021 at 636.9 billion yuan ($91.6 billion), Xu said.
