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US Companies Find A Way To Avoid Huawei Ban, The Trump Administration Is Divided On What To Do

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Yesterday we told you that the American chip maker Micron Technologies did some research and found that it could legally ship some of its products to Huawei. The latter is prohibited from obtaining parts and software from the U.S. However, companies can send chips to Huawei as long as the US parties do not represent more than 25% of the parts used to produce them. According to the New York Times, Micron is not the only American chip manufacturer that sends components to the Chinese manufacturer. When the ban was first announced in May, the Semiconductor Industry Association’s trade group sent a letter to the White House requesting an exemption that would allow some of its members to continue selling to Huawei. Although this request was rejected, some chip makers have found ways to continue to treat Huawei legally.

The paper, citing anonymous sources who were not authorized to discuss these sales, states that Intel, Micron and others have come up with alternative solutions to prevent some of their products from being labeled “American made“. These shipments will allow Huawei to continue producing smartphones, although an internal calculation requires a 40% to 60% drop in international shipments this year. This would reduce the manufacturer’s global shipments from 206 million last year to around 140 to 160 million this year. The company has already delivered 100 million phones in 2019.

Even Non-Tech Companies Like FedEx Are Affected By The Ban

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The NYtimes says that Trump administration members are aware of these sales and are not sure how to proceed. Administration officials believe the shipments violate the spirit of the law and undermine US efforts to put pressure on China when it comes to future trade negotiations. Others are not adopting a hard line because they worry about how the ban is affecting US companies; After all, Qualcomm spent $11 billion on parts, components, and software sourced from the U.S. in 2018. This type of expense will be impossible to replace for American companies. For example, Micron’s memory chips could be replaced by similar chips offered by South Korean companies like Samsung and SK Hynix.

Even some companies that do not belong to the tech industry are affected by the ban. Earlier this week, FedEx filed a lawsuit against the US government stating that the rules of the Department of Commerce’s export ban imposed an impossible burden on the transport company and created an impossible burden for FedEx to monitor the millions of shipments that transit in our network every day. FedEx is a transport company, not a police agency.

Former Department of Commerce official Kevin Wolf advises the executives of some US chip companies hit by the ban. Wolf says he is telling these executives that as long as their chips are not made in the U.S., they are free to ship to Huawei. However, he warned that if a chip company located in the states offers support from the U.S. The component itself cannot be sold to the Chinese manufacturer of network and telephone equipment.

Garrett Marquis, the White House National Security Council spokesman, criticized Wolf’s actions as describing him as annoying because a former Trade Department official, who was previously responsible for enforcing US security laws.

US companies that want to remain Huawei’s suppliers can find loopholes like other companies or move their production facilities to another country. The last option takes a lot of time and money, so you can expect US chip makers and software developers to continue to study Commerce Department regulations carefully to find a way to legally continue to do business with Huawei.

(Via: The New York Times)

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