Call to End Technology Exports to Huawei and SMIC After Discovery of Potentially Violative Chips

Representative Mike Gallagher, the Chair of the House of Representatives’ committee on China, has called for a complete halt to technology exports to Huawei and China’s leading semiconductor firm, Semiconductor International Manufacturing (SMIC). This demand follows the discovery of new chips in Huawei smartphones that may violate existing trade restrictions, Reuters news report said.
SMIC at a trade eventThe recent launch of Huawei’s Mate 60 Pro smartphone drew attention due to the inclusion of a chip believed to have been produced with the assistance of Semiconductor International Manufacturing (SMIC). Analysts suggest that the chip’s development likely relied on U.S. technology, potentially violating the Department of Commerce’s Foreign Direct Product Rule.

In a statement, Representative Gallagher stated, “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. The time has come to end all U.S. technology exports to both Huawei and SMIC to make clear that any firm that flouts U.S. law and undermines our national security will be cut off from our technology.”

Huawei has been on a trade blacklist since May 2019 due to national security concerns, which necessitates U.S. suppliers and others to secure a special license to export goods to the company. SMIC, on the other hand, was added to the entity list in December 2020 amid concerns that it could divert advanced technology to military users.

The trade restrictions imposed on both Huawei and SMIC include the Foreign Direct Product Rule, which is designed to prevent any company, regardless of location, from using tools from the United States to manufacture chips for Huawei.

Despite being on the trade lists, suppliers to Huawei and SMIC have been granted licenses worth billions of dollars to sell U.S. technology to these companies, with a significant portion of these licenses directed towards SMIC. Reuters had previously reported that approximately 90 percent of the licenses issued were for sales to SMIC.

As of now, the U.S. Commerce Department’s bureau overseeing export controls has not provided an immediate response to the call for ending technology exports to Huawei and SMIC. This development reflects the ongoing concerns over the potential misuse of U.S. technology by entities on trade blacklists, as well as the broader geopolitical tensions surrounding technology exports to China.