Trump slams the door on Huawei on his way out

The Trump administration has dealt a final blow to Huawei’s supply chain, seemingly revoking a number of US company licenses to sell equipment to the Chinese vendor and denying many requests currently pending. The move comes just two days before Donald Trump is to set down as President of the United States, to be replaced by incoming Democrat Joe Biden.

 

Back in May 2019, the US Commerce Department put Huawei on the so-called ‘entity’ list, which restricted US companies from selling the Chinese firm their products. However, this ban could be circumvented via the acquisition of a specific government, which saw a handful of companies continue to do business with Huawei, at least in the short term. 

 

As the months passed after the sanctions announcement, more and more companies reportedly applied for such a licence, including Qualcomm, Micron Technology, Samsung, Mediatek, and Macronix International. In August, a new ruling suggested that requests to supply 5G-related products to Huawei would likely be denied, though there was some speculation whether this restriction would extend beyond 5G infrastructure and include mobile phone technologies themselves.

 

Now, Reuters is reporting that the Trump administration has notified all Huawei suppliers that it is revoking existing licenses to supply Huawei and rejecting all pending applications to do so. According to sources, there were around 150 license requests pending approval, equating to around $120 billion worth of goods and technology, the vast majority of which have been denied.

 

Similarly, eight existing licenses have now been revoked from four companies to maintain consistency, according to anonymous sources. This includes licenses for Intel and Japanese chipmaker Kioxia Corp.

 

This move by the Trump administration is the latest in what will be seen as a long legacy of anti-China trade policies, the latest of which came just last week, with Chinese mobile manufacturer Xiaomi among the latest batch of companies to be restricted from US investments due to perceived ties to the Chinese military. Similarly, the MSCI Inc, FTSE Russell, and S & P Dow Jones indices all recently announced they would delist a number of Chinese companies, including the three major telcos: China Telecom, China Unicom, and China Mobile. It was expected that this delisting would see cumulative share prices drop by around $10 billion. The impact was already being felt on Friday, when Blackrock announced it was selling its $200 million stake in China Telecom.

 

With very little time left of Donald Trump’s controversial presidency, the extent of the damaged caused to China’s economy by his sanctions are beginning to become apparent. However, whether these moves will ultimately help redefine the world order when it comes to technology remains to be seen. In fact, once the initial financial damage has been ablated, these US sanctions could actually force the Chinese market to entrench itself even further, with China-aligned investors taking the place of US players and government-led initiatives seeing a push for Chinese tech self-sufficiency, such as in the semiconductor market.