US revokes Huawei export licences

The US Commerce Department has revoked export licences from vendors including Intel to stop them supplying Huawei with essential semiconductors, according to a report by Reuters.

Sources told Reuters that a total of eight export licences granted to four companies that have enabled them to continue to export to Huawei after the Chinese company was put on the entity list have been revoked by the US Department of Commerce. The report, quoting one source, said Intel and Japan’s Kioxia Corp (formerly Toshiba Memory Corp) are among the vendors that have lost their licence, though the companies concerned and the Commerce Department have refused to comment. Meanwhile, dozens of applications for new licences have been rejected.

The Semiconductor Industry Association said in its email to member companies, which has been seen by Reuters, that applicants have waited for months for licence decisions and now have no chance of having them approved under the current administration. In most likely the final action again Huawei from President Trump, who will leave the office in two days’ time, the outgoing administration is erecting a high barrier to make resuming the export business any time soon hard.

According to the official process, summarised by Reuters, “Companies that received the “intent to deny” notices have 20 days to respond, and the Commerce Department has 45 days to advise them of any change in a decision or it becomes final. Companies would then have another 45 days to appeal.”

The lengthy process is likely to be made even longer. Typically, with the change of top administration, all political appointees will be replaced, so it could be expected that any appeal process will run its full course, if not more, while the new Commerce Department leadership is put in place. Joe Biden, the President-Elect, is believed to have selected Gina Raimondo, the current governor of Rhode Island, to serve as Secretary of Commerce.

By the time of the Reuter report, about 150 licence applications are pending decision, which would be worth $120 billion goods and technologies to be exported to Huawei. Another $280 billion worth of goods and technology were yet to be processed, which the applicants assumed would more likely to be denied now.

To consider that Huawei’s annual turnover was about $130 billion in 2019 and expected to be in comparable size last year (the company reported $103 billion revenue from the first three quarters of 2020), the volume of planned import indicates the company has been stockpiling before supplies of advanced semiconductors and related technologies from the US dry up.