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US tech companies bypass a trump ban to continue selling to Huawei

SHANGHAI – Despite a ban by the Trump administration to sell American technology to Chinese telecom giants, a number of the largest US chip manufacturers have sold millions of dollars to Huawei

since the Ministry of Commerce issued the May ban, American companies, including Intel and Micron, have found ways to sell technology to Huawei, said people who spoke on the condition that they were not named because they were not authorized to disclose the data sales.

The components flowed to Huawei about three weeks ago, people said. Goods manufactured by American companies overseas are not always considered to be manufactured in the US, and suppliers use it. The sale will help Huawei continue to sell products such as smartphones and servers.

The deals underscore how difficult it is for the Trump administration to pressure companies identified as a national security threat, such as Huawei. They also point out the possible unintended consequences of a change in the network of trade relations linking the global electronics industry and global trade.

The Commerce Department is trying to block sales to Huawei by placing it on a so-called entity list. The Chinese company and its many American suppliers have created confusion. Many executives lacked solid experience of US trade controls, which led to an initial cessation of deliveries to Huawei until attorneys found out which products could be shipped. Decisions about what can and can not be sent were also frequently made by the Department of Commerce.

American companies may sell technologies that support current Huawei products by mid-August. However, a ban on components for future Huawei products already exists. It is not clear what percentage of current sales were spent on future products. Sales were estimated to have already reached hundreds of millions of dollars.

While the Trump administration was aware of the sales, officials were divided over how they should respond. Some officials believe that sales violate the spirit of the law and undermine the government's efforts to pressure Huawei, while others facilitate the ban on American companies. Huawei buys $ 11 billion of technology from US companies every year.

Intel and Micron declined to comment.

"As we discussed with the US government, it is now clear that some items may be delivered to customers Huawei complies with the entity list and applicable regulations," wrote John Neuffer, president of the Semiconductor Industry Association, on Friday in a statement .

"Every business is affected differently because of its specific products and supply chains. and every business must assess how it conducts its business best and maintains compliance.

In a payday Tuesday solicit, Sanjay Mehrotra, chief executive officer of Micron, said that the company had halted deliveries to Huawei after the trading department took action last month. About two weeks ago, the sale resumed after Micron reviewed the entity list rules and found that we could legitimately resume shipping a subset of products, Mehrotra said. "However, there are still significant uncertainties surrounding the Huawei situation," he added.

A spokesperson for the Commerce Department referred to a section of the official announcement about the added company in response to questions about the sales to Huawei. The list of entities included that the purpose was "to prevent activities being or the foreign policy interests of the United States ".

The fate of Huawei, a crown jewel of Chinese innovation and technological expertise, has become a major event symbolizing the economic and security distance between the United States and China. The Trump Administration has warned that Chinese companies, such as Huawei, which manufacture telecommunications network equipment, could intercept or secretly forward information to China. Huawei has rejected these allegations.

President Xi Jinping of China and President Trump are expected to hold an "expanded" conversation this week during the 20-member assembly in Japan. Trade-off compromise failed in May. After the talks faltered, the Trump administration announced new restrictions on Chinese technology companies.

While the Trump Administration has highlighted security and legal concerns to justify its actions, some analysts fear that Huawei and other Chinese technology companies may become farmers in the trade negotiations. Together with Huawei, the government has prevented a Chinese supercomputer manufacturer from buying American technology, and is considering adding the Hikvision surveillance technology company to the list.

Kevin Wolf, a former commercial department official and partner at law firm Akin Gump, has advised several American technology companies supplying Huawei. He told executives that adding Huawei to the list does not prevent American suppliers from continuing to sell unless the goods and services are manufactured in the United States.

For example, a chip can still be supplied to Huawei if it is manufactured outside the United States and does not contain any technology that may harbor national security risks. However, the sale of American companies is limited. For example, if the chipmaker provides US-based troubleshooting services or guidance on using the product, the company can not sell to Huawei, even if the physical chip is manufactured overseas, Wolf said.

] "This is not a gap or interpretation because there is no ambiguity," he said. "It's just esoteric."

In some cases, American companies are not the only source of important technology, but they want to avoid losing Huawei's valuable business to a foreign rival. For example, Idaho-based Micron is competing with South Korean companies such as Samsung and SK Hynix for the supply of memory chips for Huawei's smartphones. If Micron is unable to sell to Huawei, orders could easily be shifted to these competitors.

Beijing has also put American companies under pressure. Earlier this month, the Chinese government announced that it would create a list of " unreliable businesses" to punish companies and individuals who they believe violate Chinese interests. The following week, China's main business planning agency called foreign executives, including representatives from Microsoft, Dell and Apple. It warned them against stopping sales to Chinese companies and hinted that companies should lobbied the US government to stop the bans. For some American companies, such as Apple, which relies on China for many sales and much of its production, much is at stake.

Mr. Wolf said several companies have sought to continue their sales to Huawei, with some companies considering a total relocation of the manufacturing and services of some overseas products. The escalating trade battle between the United States and China "causes companies to fundamentally rethink their supply chains," he added.

This could mean that American companies are shifting their expertise beyond production to outside the United States. Martin Chorzempa, a senior scientist at the Peterson Institute for International Economics, said: "American companies can outsource some things from China if this is problematic for their supply chain, but they can also delay US technical development if this becomes problematic." , he said. "And China remains a big market."

"Some of the big winners could be other countries," Chorzempa said.

Some American companies have complained that compliance with strict restrictions is difficult or impossible and their business will be affected.

On Monday, FedEx filed a lawsuit against the federal government, claiming that the Department of Commerce's regulations were "an impossible burden" for a company like FedEx to know the origin and technical makeup of all shipments.

The FedEx complaint did not specifically name Huawei. However, the agency's regulations prohibiting the export of American technology to Chinese companies constituted "an unreasonable burden on FedEx to monitor the millions of shipments that our network goes through on a daily basis."

"FedEx is a transportation company, not a law enforcement agency," the company said.

A spokesman for the Commerce Department said that they had not yet investigated FedEx's complaint, but that they were defending the role of the agency in protecting national security.

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