US Reportedly Approves Licences For Huawei To Purchase Auto Chips

Officials in the United States have authorised licencing applications worth hundreds of millions of dollars for Huawei, which is a Chinese telecom company on the blacklist, to purchase chips for its expanding auto component business.

Trade restrictions imposed by the Trump administration on the sale of processors and other components used in Chinese company Huawei's network gear and smartphones operations have hampered the world's largest telecommunications equipment maker. The Biden administration has tightened its stance on Huawei exports, refusing the company licences to sell processors for use in or with 5G devices.

However, recently, individuals familiar with the application process revealed that the United States has awarded licences to suppliers allowing them to sell semiconductors to Huawei for car components, including video screens and sensors. The clearances come as Huawei shifts its focus away from items that are subject to United States trade restrictions.

Auto chips aren't usually thought of as sophisticated, which lowers the threshold for approval. According to a source familiar with the licence approval process, the American government is issuing permits for chips in automobiles that may contain other 5g-capable components.

According to Reuters, a spokesperson from the United States Department of Commerce said that to prevent Huawei's access to commodities, software, or technology for actions that could compromise American national security and foreign policy interests, the government continues to implement licencing policies. It was also stated that the Commerce Department is not allowed to release information on licence approvals or denials.

Even though a spokesperson from Huawei denied commenting on the licensing, said that "we are positioning ourselves as a new component provider for intelligent connected vehicles, and our aim is to help car OEMs (manufacturers) build better vehicles".

The American government placed the Chinese telecom giant on a Commerce Department trade blacklist in 2019. This move made it illegal for American goods and technology to be sold to Huawei without a special license.

Last year, the American authorities tightened restrictions on the sale of chips created with American equipment in other countries and also campaigned to make sure that its ally nations ban Huawei from their 5G networks because of security concerns. But the security-related allegations have been refuted by Huawei.

After the United States regulations forced the Chinese company to sell a portion of its once-dominant handset business and before other growth sectors had fully matured, Huawei recorded its largest-ever revenue decrease, 47 per cent year-on-year, in the first half of 2021.

Last week CNBC published a report according to which a Huawei executive stated that the Chinese technology giant would return to the "throne" of the smartphone sector. Guo Ping, the chairman of Huawei, which was once No. 1 in the smartphone market, said: "The biggest difficulty for us at present is on mobile phones. We know that [to produce] phones with small size and low power consumption requires advanced technology. Huawei can do the design, but no one is able to help us to produce. We are stuck."

One of Huawei's main problems is that Chinese chipmakers are unable to provide the cutting-edge semiconductors that the Shenzhen-based firm needs. But according to Guo, it doesn't mean that the company will leave the smartphone business. Instead, the company will collaborate with partners to improve their technology, which would benefit Huawei because it will have access to Chinese-made silicon.

Guo said: "I expect that as the capability in chip manufacturing increases, [Huawei] will return to the smartphone throne. I hope the day when China is able to make chips can come sooner. Until that day, the sector will exist, and we will try to retain and develop our technologies, to make sure we are able to make competitive phones."