Huawei suppliers likely to face further US limits under defence bill

By Debby Wu and Steven T. Dennis 

US lawmakers are moving to prohibit the Pentagon from doing business with companies that sell computer chips and services to Huawei Technologies Co. under defence legislation that could put further pressure on suppliers to the Chinese tech champion. 

The bipartisan National Defense Authorization Act unveiled on Saturday contains language that would effectively bar Defense Department contractors from selling semiconductors, chip-making equipment or tools for designing semiconductors to Huawei or its affiliates.

 

The provision is likely to become law given its inclusion in the bill, which is considered “must-pass” before Congress adjourns for the year, though an unrelated provision on transgender care for minors could cost the legislation Democratic support needed to pass it.

 

If approved, the bill risks squeezing global chip firms with ties to Shenzhen-based Huawei, which has been targeted by US sanctions as part of a broader campaign in Washington to rein in China’s tech ambitions. Companies that maintain business ties with Huawei could lose access to work for the Pentagon, which committed nearly $460 billion on contracts in fiscal 2023, according to the Government Accountability Office.

 

The bill emerged as the US continues to tighten limits on China’s access to advanced technologies, though the Commerce Department still allows Huawei to receive a limited flow of less-sensitive goods. Last week, Republican Representative John Moolenaar, who chairs the House’s China Select Committee, criticised the Biden administration for leaving loopholes for Huawei to continue acquiring American technology.

 

Earlier this year, the US revoked some licenses including those belonging to Intel Corp. and Qualcomm Inc. for doing business with Huawei. Still, the Commerce Department approved licenses worth $60 billion for selling to Huawei between November 2020 and April 2021, after the company was included on the agency’s so-called entity list in 2019, according to House Foreign Affairs Committee Chairman Michael McCaul. The Commerce Department does not release information about which companies still have licenses to supply to Huawei or are applying for such approval.

 

Restrictions on Huawei in the defence legislation would take effect 270 days after being signed by the president. The measure includes a waiver if the secretary of Defence determines a contract is needed for national security and no other providers are available.

 

The defence bill still faces a hurdle in the House, where the top Democrat on the Armed Services Committee, Adam Smith, is urging Republicans to drop a provision prohibiting treatment for military dependent children for gender dysphoria.