Back in May this year, US Commence Department placed Huawei into the Entity List which would restricts US-based companies from trading with the Chinese telecommunication giant.
This effectively cuts off Huawei’s access to U.S. supply chain unless the U.S. companies are able to obtain special licenses for trading with Huawei. So far, Microsoft is one of the few U.S. companies which have obtained this special license from the Commence Department.
However, despite the trade restrictions placed on Huawei, some U.S. companies are able to continue trading with the Chinese firm due to the de minimis rule. This provision would allows US companies to trade certain products as long as they are able to prove that 75% of the work occurs overseas.
Over time, U.S. officials start to see this provision as a form of loopholes that allow American companies to resume their business ties with Huawei. Therefore, there are now considerations for the administration to lift the current threshold from 75% to 90%, as well as broadening the list of products. The new changes could also come effect as early as January next year.
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These potential changes will no doubt, spark a fresh round of lobby from industry associations representing U.S. chipmakers, software companies and manufacturers who will be affected by the new changes.
It remains to be seen how the new changes would potentially affect Huawei. In fact after the US trade ban, the Chinese firm has been actively sourcing new suppliers outside of the U.S., as well as developing their in-house chips.
Their latest Mate 30 handset for instance, no longer contains any US-made components. In the case of the Huawei Mate 30 smartphone, the Chinese firm had sourced audio chips from Dutch’s NXP instead of Cirrus Logic, and developed their in-house Bluetooth chips to eliminate their reliance on Broadcom.
Source: Bloomberg
Featured Image: Huawei Press Center
