The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) today further restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software. In addition, BIS added another 38 Huawei affiliates to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR) and modified four existing Huawei Entity List entries. BIS also imposed license requirements on any transaction involving items subject to Commerce export control jurisdiction where a party on the Entity List is involved, such as when Huawei (or other Entity List entities) acts as a purchaser, intermediate, or end user. These actions, effective immediately, prevent Huawei’s attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology.

(U.S. Department of Commerce, Aug 17)

Brady Wang's key takeaways:

A huge blow on Huawei (HiSilicon) and its supply chain stakeholders.
Major impacts:
- Huawei can no longer get commercial chips from suppliers like MTK and other commodity memory vendors.
- Huawei’s temporary general license (TGL) has expired and is not being extended. This could lead to difficulties in selling older models.
- If production started before Aug 17, there is no need to apply for the license, but the final shipment date needs to be Sep 14.
- Only non-5G items will be reviewed on a case-by-case basis – with some possibility of approval.
- All other license applications (including 5G) will be reviewed, but the presumption is denial.
Huawei has significant inventory of key components but it probably did not expect the new restrictions to also cover commercial chips.
The company may have been caught on the back foot and might not have the right parts to complete production. Worst case, its smartphone business could turn to zero by Q4.

Commerce Department Further Restricts Huawei Access to U.S. Technology and Adds Another 38 Affiliates to the Entity List

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