September 27, 2020

Huawei faces even tighter US chip restrictions

It's not allowed to buy foreign chips built to a similar level using US technology.

Huawei P40 Pro Plus standing up on table hero shot

  • The Commerce Department is further tightening chip restrictions for Huawei.
  • The Chinese firm now can’t buy foreign chips built with US tech if they’re comparable.
  • The measure is meant to prevent Huawei from circumventing a rule from May.

It just became considerably more difficult for Huawei to obtain alternative chips for its devices while US trade restrictions are in effect.

The Commerce Department has amended its May 2020 ban to bar Huawei from using foreign-made chips that are built with certain US technology “to the same degree� as roughly equivalent US chips. In other words, Huawei can’t have a partner either make highly similar chips or provide ready-made parts.

The move is meant to prevent Huawei from trying to “circumvent� US trade restrictions. In a statement to CNBC, Secretary of State Mike Pompeo claimed that Huawei had “continuously tried� to dodge the chip rules imposed in May.

Read more: Can Huawei survive without its custom Kirin chips?

The new limits on chips come alongside an expansion of the overall US trade ban that puts Huawei on an Entity List forbidding business with US companies unless there’s an explicit license. The widened Entity list adds 38 Huawei cloud and research affiliates spread across 21 countries, including outlets in mainland China and Hong Kong, France, Germany, Russia, South Africa, and the UK.

The Commerce Department also reiterated that a temporary license allowing US support for Huawei products had expired. Google now can’t directly provide updates to Android for Huawei phones with full Google services, and rural carriers can’t rely on Huawei equipment. Android phones built on the open source code, such as the P40 Pro, shouldn’t be included.

We’ve asked Huawei for comment.

The move further constrains Huawei and may leave it with few options for chips to power its products. The broad wording certainly doesn’t help — just how similar does a chip have to be for the restrictions to apply? While Huawei said it can still make some of its lower-end Kirin chips in China, even that isn’t guaranteed when some of the company’s domestic plants rely on US equipment. It might have to scramble if it wants to keep making phones and networking technology without major disruptions.