Huawei decries ‘arbitrary and pernicious’ rule changes aimed at chip production

Huawei today issued a statement calling recent Department of Commerce Entity foreign direct product rules changes “arbitrary and pernicious.” The company asserted that the rules changes will not only negatively affect the company but the operation of networks worldwide.

The Department of Commerce May 15 announced changes to the foreign-produced direct product rule and the Entity List that it hopes will hamper Huawei’s efforts to develop its own alternatives to U.S. semiconductors it can no longer access. The Commerce Department, through its Bureau of Industry and Security (BIS), added Huawei to its Entity List in May 2019. Presence on the list, usually reserved for companies deemed threats to national security or in noncompliance with U.S. export policies, means that U.S. companies can’t do business with Huawei without a special license, applications for which are generally denied (see “Huawei faces U.S. technology access ban”).

Placement on the list effectively banned Huawei from access to the U.S. component and software technologies on which it had come to rely. This technology includes semiconductors. The Commerce Department became aware that Huawei was developing alternatives to the U.S.-sourced chips working with outside fabrication facilities such as TSMC. So the Department extended its restrictions to include software used in semiconductor designs as well as the U.S.-produced semiconductor fabrication equipment of the type foundries such as TSMC use (see “U.S. tightens screws on Huawei”).

“Huawei categorically opposes the amendments made by the U.S. Department of Commerce to its foreign direct product rule that target Huawei specifically,” began Huawei’s statement. Further on, the company said, “The decision was arbitrary and pernicious, and threatens to undermine the entire industry worldwide. This new rule will impact the expansion, maintenance, and continuous operation of networks worth hundreds of billions of dollars that we have rolled out in more than 170 countries.”

Huawei added that it has begun “a comprehensive examination” of the new rules. “We expect that our business will inevitably be affected. We will try all we can to seek a solution. We hope that our customers and suppliers will continue to stand with us and minimize the impact of this discriminatory rule,” the statement concludes.

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