The U.S. Commerce Department has placed China’s Huawei Technologies Co. and 67 of its affiliates around the world on a blacklist, restricting their access to U.S. suppliers.
The department said on May 16 (local time) that the restrictions on Huawei and its affiliates would take effect on May 17.
The department said on May 15 it would put Huawei on an “Entity List,” meaning that any U.S. company will need a special license to sell products to the Chinese tech giant, which is the world’s largest telecom networking equipment maker and second-largest smartphone manufacturer.
The department’s move came one day after U.S. President Donald Trump signed, citing national security concerns, an executive order to ban U.S. imports of equipment made by Huawei and another Chinese technology company, ZTE Corp.
Following the restrictions on Huawei’s access to U.S. suppliers, the Trump administration will come up with measures to block U.S. imports of Huawei products.
Commerce Secretary Wilbur Ross said Trump had given his department 150 days to establish a process to screen U.S. companies’ purchases of equipment from Huawei and other equipment providers with which officials have concerns.
Washington has pressured both allies and foes to avoid using Huawei for 5G networks as the company poses a significant risk of involvement in activities contrary to the U.S. national security or foreign policy interests.
Washington’s action is expected to disrupt Huawei’s production of telecom equipment and smartphones. Huawei is currently purchasing $67 billion worth of semiconductor-related parts from about 92 major suppliers every year.
If Huawei suffers disruptions in its operations, it will affect the introduction of 5G services in many countries around the world.
An employee of Huawei told Nihon Keizai Shimbun that if transactions with U.S. suppliers become more difficult, it could have a bigger impact on telecommunication devices than smartphones and that implementation of 5G services in other countries could be delayed due to a delay in supply of Huawei 5G telecommunication equipment.
Analysts say that the U.S. sanctions on Huawei are not limited to U.S. companies. In principle, the U.S. Export Administration Act of 1979 applies to all products that contain more than 25 percent of U.S. products or software. For example, even products made by a Japanese company cannot be traded with Huawei if the U.S. parts account for more than a quarter of the total parts.
Japan's Murata Manufacturing Plant, which supplies capacitors for smartphones to Huawei, and Taiwan's Hong Hai Precision Industry Co., which is the world's largest smartphone producer, are also expected to suffer.
Washington’s sanctions against Huawei are also expected to escalate the ongoing trade disputes between the United States and China. Commerce Secretary Ross said that his department’s action against Huawei is not part of China trade talks. But analysts say that the Chinese government will use non-tariff barriers to retaliate to protect Huawei.