Amidst Trump’s escalating and increasingly aggressive campaign against Chinese smartphone manufacturer, Huawei, tech companies in the US have found a legal loophole that allows them to continue selling parts to the tech giant.
Other tech giants and chip manufacturers, including Intel and Micron, has resumed selling their products to Huawei after finding out that they can bypass the executive order that put the Chinese company in the “entity list” which effectively placed Huawei in a US ban and labeled their goods as not “American-made,” a statement from sources knowledgeable about the dealings.
Tech companies have resumed partnering with Huawei and started selling parts to them again in the last three weeks. Huawei has said it buys around $11 billion in technology from United States companies each year.
According to these sources, the decision of the Commerce Department to include Huawei in the so-called entity list has confused US suppliers on what they can, and they cannot sell to the Chinese tech superpower. Many executives lacked deep experience with American trade controls, leading to initial suspensions in shipments to Huawei until lawyers could puzzle out which products could be sent.
“As we have discussed with the U.S. government, it is now clear [that] some items may be supplied to Huawei consistent with the entity list and applicable regulations,” John Neuffer, the president of the Semiconductor Industry Association, wrote in a statement on Friday.
US officials don’t know how to respond
Now, companies like Micron and Intel have finally found a way to circumvent the new restriction against Huawei, and Washington is aware of these sales. However, it appears as if officials don’t know how to respond to the bypass.
Some US officials are adamant of the US company’s circumvention of the export regulation, citing that it violates the spirit of the law and undermines the efforts of the U.S. government to pressure Huawei, a company that they have tagged as a national security threat.
On the other hands, other officials are more accepting of the sales, saying that it alleviates the burden of American tech companies — as the ban against Huawei has been hurting their businesses and has immensely affected the tech market in general.
“Each company is impacted differently based on their specific products and supply chains, and each company must evaluate how best to conduct its business and remain in compliance,” Nueffer added.
Sanjay Mehrotra, Micron’s chief executive, said last Tuesday that since the ban, Micron initially halted sending their goods to Huawei, but they immediately resumed after they knew that there is a way for them to continue their business relationship with the Beijing-based company.
Micron reviewed the entity list rules and “determined that we could lawfully resume” shipping a subset of products, Mr. Mehrotra said. “However, there is considerable ongoing uncertainty around the Huawei situation,” he added.
Kevin Wolf, a former Commerce Department official and partner at the law firm Akin Gump, has previously advised American tech companies that selling to Huawei non-American-made products is perfectly legal. According to him, Huawei’s addition to the list did not prevent American suppliers from continuing sales, as long as the goods and services weren’t made in the United States.
“This is not a loophole or an interpretation because there is no ambiguity,” he said. “It’s just esoteric.”
Google, the company behind Android, and who revoked Huawei’s license, is also reportedly finding ways to resume business with Huawei. For one, Google has urged the US government to lift the ban against the Chinese smartphone manufacturer — citing security threats can be more viable with the policy.
The thing about Android OS that makes it a complicated venture when it comes to Huawei is that, although the operating system is open-source — meaning anyone can use it freely for their project — the source code is still licensed by Google, an American company that is required to comply with the Huawei ban EO. But Google is finding ways to separate Android from Google to circumvent export regulations against Huawei and other similar future restrictions.
Nonetheless, the bypassing of the Huawei ban by American tech companies underscore how difficult it is for the Trump administration to clamp down on companies that it considers a national security threat, like Huawei. It also highlights a new era of how the tech world is doing business with each other.