WASHINGTON – The U.S. technology industry is pushing the Trump administration for permission to supply Chinese tech company Huawei with parts for consumer technology products, arguing such sales won’t hurt U.S. national security, according to people familiar with the matter.
Tech companies are asking the administration to allow sales of chips and other parts for Huawei-made smartphones and laptops, even if the White House is intent on continuing to block exports of supplies Huawei uses to manufacture 5G wireless equipment, according to the people, who requested anonymity to discuss sensitive issues.
Several large semiconductor companies recently made such requests in applications to the Commerce Department, petitioning for special licenses that would allow them to sell some products to Huawei, these people said.
The subject is likely to come up Monday at the White House, where Huawei’s major suppliers are scheduled to meet with National Economic Council Director Larry Kudlow, according to people familiar with the matter. Companies such as Qualcomm, Intel and Google are expected to talk with Kudlow and other administration officials, and President Donald Trump may make a brief appearance.
Tech companies are also asking the administration to relax the anti-Huawei rules that now bar them from participating alongside the Chinese company in global standards-setting bodies, which establish technical rules that underpin global networks, according to one person familiar with the matter.
It is unclear to many companies how lenient the Trump administration might be. Some of the people familiar with the administration’s discussions say there is a split among officials about whether to ease the Huawei ban, with Treasury Secretary Steven Mnuchin favoring some relaxation and some issuing of licenses, while China hawks including Peter Navarro hold the opposite view. The White House declined to comment.
Prominent lawmakers, including Sens. Marco Rubio (R-Fla.) and Mark R. Warner (D-Va.), have warned the president not to ease up on Huawei.
Earlier this week, bipartisan groups of lawmakers in the House and Senate introduced legislation that would reinforce the existing ban on U.S. companies providing computer chips and other key parts to Huawei.
The measure would prohibit the president from removing Huawei from the Commerce Department’s export blacklist, known as the Entity List, without congressional approval.
“Our bill will prohibit U.S.-based companies from doing business with Huawei until they no longer pose a national security threat,” said Sen. Mitt Romney (R-Utah), who was among the Senate sponsors. The House has included similar language in its version of the fiscal 2020 defense authorization bill.
The Commerce Department added Huawei to a trade blacklist in May, saying it had “reasonable cause to believe” the company was “involved in activities contrary to the national security or foreign policy interests of the United States.”
U.S. officials have said Huawei has links to the Chinese government and that its telecom equipment could be used to disrupt or spy on American communications. Huawei denies these claims. The Chinese company is the world’s largest seller of telecom equipment, including for super-fast 5G wireless networks. It is also a major global seller of smartphones and a big consumer of U.S. chips and software. Huawei said it spent $11 billion on U.S. technology last year.
Shortly after blacklisting the company, the White House issued a temporary reprieve that allowed some sales to continue for 90 days. That period expires Aug. 19, after which the full ban will take effect unless companies receive special licenses.
In late June, as Trump was attempting to restart trade talks with China, he said the United States would allow some sales to Huawei, though he did not provide details.
On July 9, Commerce Secretary Wilbur Ross said the agency would issue licenses “where there is no threat to U.S. national security,” saying the administration didn’t want U.S. companies to needlessly lose out on sales. He added there would be a “presumption of denial.”
U.S. chipmakers hope the Commerce Department will treat consumer products like cellphones and laptops with more leniency than telecommunications equipment, according to people familiar with the chipmakers’ plans, who asked to speak anonymously to discuss government business.
If that is the case, companies such as Xilinx, which make highly advanced and complex semiconductors used in 5G networks, might still be prevented from selling to Huawei.
“Xilinx has and continues to comply with all government and legal requirements across our global operations. We continue to actively track the Huawei situation as it remains dynamic,” spokesman Brian Garabedian wrote in an emailed statement.
Some U.S. chipmakers believe if their products are manufactured outside the country, they are not affected by Huawei’s addition to the trade blacklist, because the products are not American in origin.
Some attorneys who focus on U.S. export law have disagreed with that interpretation, arguing the value in the chip comes not just from the physical manufacturing of the product, but also from the design, which happens largely in the United States.
The Commerce Department has not indicated it would crack down on companies that continue to sell Huawei products manufactured outside the United States by American companies, according to the people familiar with chipmakers’ plans.