US grants licences for sale of automotive chips to China's Huawei
26 August, 2021
US officials have approved licence applications worth hundreds of millions of dollars for China's blacklisted telecoms company Huawei to buy chips for its growing automotive component business, according to sources.
Huawei, the world's largest telecoms equipment maker, has been hobbled by trade restrictions imposed by the Trump administration on the sale of chips and other components used in its network gear and smartphones businesses.
The Biden administration has been reinforcing the hard line on exports to Huawei, denying licences to sell chips to the Chinese smartphone maker Huawei for use in or with 5G devices.
But in recent weeks and months, the US has granted licences authorising suppliers to sell chips to Huawei for vehicle components such as video screens and sensors. The approvals come as Huawei pivots its business towards items that are less susceptible to US trade bans.
Automotive chips are generally not considered sophisticated, lowering the bar for approval. An official said the government is granting permits for chips in vehicles that may have other components with 5G capability.
Asked about the automotive licences, a US Department of Commerce representative said the government continues to consistently apply licensing policies to restrict Huawei's access to commodities, software or technology for activities that could harm US national security and foreign policy interests".
The Commerce Department is prohibited from disclosing licence approvals or denials, the representative said.
A Huawei spokeswoman declined to comment on the licences but said "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."
Citing threats to US national security and foreign policy interests, the US has gone to great lengths to slow the growth of Huawei's key communications-related business.
After placing Huawei on a US Commerce Department trade blacklist in 2019, which banned sales of US goods and technology to the company without special licences, the US last year ratcheted up restrictions to limit the sale of chips made abroad with US equipment.
It also campaigned to ensure allies excluded Huawei from their 5G networks over spying concerns. Huawei has denied the allegations.
Huawei reported its biggest revenue drop in the first half of 2021, after the US restrictions drove it to sell a chunk of its once-dominant handset business, while new growth areas have yet to fully mature.
Underscoring the shift into smart cars, the company's rotating chairman Eric Xu announced pacts with three state-owned Chinese car makers, including the Baic Group, to supply "Huawei Inside", a smart vehicle operating system, at the Shanghai car show earlier this year.
In another sign of Huawei's ambition in the space – after suppliers received licences authorising the sale of tens of millions of dollars of chips to Huawei – the company has requested they apply again and request higher values such as $1 billion to $2bn.
Licences are generally good for four years.
Richard Barnett, chief marketing officer at global electronics consultancy Supply Frame, said Huawei is in the "early innings" of trying to invest in the $5 trillion automotive market that has large potential growth both inside and outside of China.
"Cars and [lorries] are now computers on wheels," said Mr Barnett, "That convergence is what is driving Huawei's strategic focus to be a bigger player in that area."
Source: www.thenationalnews.com