China may not have access to U.S. chip technology, as the Trump administration is considering measures to take it away. Recently, China's Huawei Technologies Co. Ltd was under scrutiny and a row then followed. The Chinese company is dependent on American chip technology for its handsets,
Reuters reported that U.S. government officials are in the process of making changes in the Foreign Product Rule. What it does is classify foreign products using U.S. technology under strict control. These alterations are under draft by the commerce department, stating that companies that make computer chips need a special license for utilizing American made equipment for making these chips for Huawei.
In the eyes of U.S. administration, Huawei is not seen favorably. The Chinese tech firm has been blacklisted, a directive that prohibits American companies from inking an agreement with them. Included in the U.S. agenda is convincing allies to drop Huawei from selling 5G equipment, that they are bugged for spying purposes. But, the Chinese firm has denied anything about it.
Next in the cross-hairs of the U.S. are the supply chains, that are not accessible yet. Changes to lessen access to U.S. chip technology are done to slow the pace of China's tech advancement. Although tighter and stringent measures to hinder access can disrupt the global semiconductor supply and backlash on U.S. firms.
Sources reveal that the changes are under deliberation for weeks, but only proposed lately. Analyst Holger Mueller related to siliconANGLE, saying that the move to prevent access of Huawei to sensitive advanced equipment is a positive move. If the company is indeed guilty of the accusations, then it is justified.
If there is actual proof of Huawei is guilty and factual, not just mere accusations but no objective proof is yet given. Mueller said it would be worse for Huawei and 3rd party U.S. suppliers who will grossly be affected by the move. Supply chains will be under stress from each end, that is Huawei and the 3rd party that will be separate.
To recall, back in April 2018, the U.S. banned chip exports to the Chinese company ZTE, for their infringing of Iran sanctions. President Trump slapped a fine for the Chinese tech firm, so it can get its deliveries. Several months later, Huawei releases a handset with no U.S.-made components, even claiming better performance than Qualcomm with their Kirin chips. Added to the handset with zero U.S. parts is 5G base station that was shipped with no U.S.-made components as well.
On May 2019, the U.S. Commerce department put Huawei on an 'entity list' that needed special permissions for U.S. sales. This caused a split from U.S. dependence and Taiwanese chip makers were taking orders that Huawei cannot produce, on its own and even getting Taiwanese chip engineers to make chip factories in Mainland China.
With the U.S. limiting the access of Huawei to chip technology, there might be consequences of these restrictions. This may give a chance for China to be self-sufficient and breed competition to the U.S. as well, with American technology exports that will be a loss for U.S. companies.