Briefing

U.S. cabinet officials agree on plan to restrict Huawei’s access to chips

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Foreign firms using U.S. chip-making equipment would need a U.S. government licence to supply Huawei under the proposed rules, according to multiple sources. (Reuters)

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Talking point: Most chip-making equipment worldwide relies on U.S. technology, so this rule could have far-reaching implications. U.S. President Donald Trump balked at a similar proposal last month. His administration has become particularly critical of China recently, though, repeatedly blaming it for the spread of COVID-19. Even if this change is imposed, Huawei is well positioned to push back against it, as it did with mixed success against the American campaign to get its allies to block it from their 5G networks. More than 90 per cent of Huawei’s 150,000-person China-based workforce is back following nationwide shutdowns. It’s also increasing its R&D spending by US$5.8 billion to more than US$20 billion, which could help it reduce reliance on U.S. suppliers. As the firm’s CEO, Ren Zhengfei, put it in an interview this week, “The U.S. will continue to increase sanctions on us, and we will have to complete [the new technologies] before that happens.”