Huawei's temporary license to trade with US companies just expired a few days ago following extension after extension, but the Chinese manufacturer is in for even more trouble. The US Department of Commerce and Department of State have announced that they will further restrict access to US technology and add 38 additional Huawei affiliates to the entity list.
The temporary license is replaced by a permanent authorization for Huawei entities with "the sole purpose of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently 'fully operational networks' and equipment." The new exemption is thus exclusively meant for networking infrastructure with built-in Huawei technology. That means that it will be even more difficult for Huawei to provide further Android system updates.
Commerce Secretary Wilbur Ross explains why the government decided to take this step, mainly focusing on Huawei getting access to semiconductor products and intelligence from US manufacturers:
Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party. As we have restricted its access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.
While we have on good authority that Play Services updates won't be affected by the new ramifications, we don't know if future Google-ified Android versions or security patches will be provided to those Huawei phones that still run Google apps and services. In any case, the tightened restrictions will make it next to impossible for Huawei to continue producing its own processors, let alone import US chips — much to Qualcomm's despair.