In a significant development on Wednesday, Representative Mike Gallagher, Chair of the House of Representatives Committee on China, has called for a complete cessation of technology exports to Huawei and China’s leading semiconductor manufacturer, Semiconductor International Manufacturing Corp (SMIC). This move comes in the wake of a startling revelation regarding new chips found in Huawei smartphones, which may potentially breach existing trade restrictions.
Huawei’s Latest Offering Raises Concerns
Chinese electronics giant Huawei recently introduced the Mate 60 Pro smartphone, which has garnered attention due to its groundbreaking chip. Analysts have raised suspicions that this chip’s production involves technology breakthroughs attributed to SMIC, a company currently under scrutiny.
A Potential Violation of U.S. Trade Regulations
Representative Gallagher emphasized, “This chip likely could not be produced without US technology, and thus SMIC may have violated the Department of Commerce’s Foreign Direct Product Rule.” He further stated, “The moment has come to stop all technology exports from the United States to Huawei and SMIC in order to make it clear that any company that disobeys American law and jeopardizes our national security will be denied access to our technology.”
Background: Huawei and SMIC on Trade Restrictions
Huawei faced trade restrictions in May 2019 due to national security concerns, resulting in the necessity for its U.S. suppliers and others to obtain special licenses for shipping goods to the company. SMIC, on the other hand, was added to the entity list in December 2020 amid apprehensions that it could divert advanced technology for military applications.
Existing Trade Rules and Their Loopholes
The trade restrictions imposed on both Huawei and SMIC encompass the Foreign Direct Product Rule, designed to prohibit any company worldwide from utilizing U.S. tools in manufacturing chips for Huawei. However, it has come to light that suppliers to these entities have received billions of dollars worth of licenses for selling U.S. technology, with the majority allocated for transactions with SMIC.
Seeking a Response from the U.S. Commerce Department
As this situation unfolds, the U.S. Commerce Department’s bureau overseeing export controls has not yet provided an official response to Representative Gallagher’s call for halting technology exports.