The Department of Commerce has announced a 90-day reprieve to an import ban against Chinese manufacturer Huawei. The company now has a Temporary General License to engage with U.S. vendors on a limited basis — in this case, Google will be allowed to provide software updates to Huawei for its Android phones while Huawei's component suppliers will be able to finish deliveries for previously-made orders. It will also give telcos dependent on Huawei products time to potentially find alternative solutions.
On Thursday, the agency placed Huawei on its Entity List as a response to alleged sanction breaches related to business conducted in Iran. The action effectively prohibited vendors from providing the company any product made in the United States. A growing number of suppliers, including Google, Intel, and Qualcomm, have announced their compliance with the move.
The granting of Huawei's temporary license is seen as a release valve for the many carriers that use its equipment in their networks — most of them are concentrated in Europe and Asia with a few service providers across rural parts of the U.S. The company is able to pass along security patches and software updates to their clients for the time being. Huawei will also be able to continue contributing to the standards-forming process for 5G.
The grace period also gives Huawei time to determine alternative sources for its U.S.-made components — it spent $11 billion to procure them last year. Huawei's existing suppliers are also able to continue providing products and services. Nikkei reports that Huawei has built a stockpile of key U.S.-sourced components that may last up to a year. The company's founder, Ren Zhengfei, told reporters on Saturday that its operations will survive through the ban.
The Department of Commerce may elect to extend the license past August 19. We've reached out to Google and Huawei for comment.
Competing Chinese telecommunications firm ZTE also went through a similar ban-and-reprieve process having been placed on the Entity List in 2016 for sanctions infractions. It complied with investigators for about a year and was due to pay a $1 billion fine before the Department of Commerce alleged that the company lied in documents and had rewarded employees for covering up the violations. Fines were boosted and compliance monitors were installed as conditions for relief from the import restrictions. Reuters has been told by sources that many European and South Asian wireless carriers struggled to cope with the saga.
Google has sent us a statement indicating its intentions to resume security and app updates for Huawei phones.
Keeping phones up to date and secure is in everyone's best interests and this temporary license allows us to continue to provide software updates and security patches to existing models for the next 90 days.
Reuters: License likely to be extended
Reuters reports from two sources that the Department of Commerce is expected to extend Huawei's Temporary General License by 90 days, potentially allowing U.S. exporters to trade with the company through November 17.
Suppliers have been waiting to be approved for trade with Huawei.
One source said that Presidents Trump and Xi are expected to discuss Huawei as part of a trade negotiation phone conference this weekend. A decision on a license extension may follow.
This story was originally published on May 19, 2019.
- Department of Commerce