American technology companies are still trading with Huawei despite the ‘entity list’ ban that prohibits them from doing so, sources close to the firms say.
The New York Times is reporting that Intel and Micron are not labeling their goods as ‘American made’ in an effort to keep selling products to China-based Huawei.
Huawei is on an ‘entity list’ of Chinese companies who are barred from trading with American companies unless they gain a special license.
The export restrictions mean Huawei has been unable to purchase chips from American suppliers.
Shipments head to China
It also restricts their access to the Google-owned Android operating system.
According to the unnamed sources, the chips produced by the American companies began shipping to Huawei three weeks ago. The chips will help Huawei continue to produce smartphones and other electronic devices.
It also shows how Trump may have underestimated the backlash from US companies in relation to the ban.
Google executives have already warned the administration that limiting access to Android could cause a security threat. The export ban sent shockwaves throughout the tech industry.
Ban will cost both sides
Many American companies were unsure of what they could and couldn't sell to Huawei and other Chinese companies.
This sparked a total stoppage of exports while companies scrambled to assess the new laws. Huawei says the ban will cost them 30bn dollars in revenue over the next two years.
Companies are allowed to continue to trade with Huawei and other companies on the entity list until mid-August. However, a ban on products intended for future Huawei products is already in place.
Future products to be squeezed
There is no clear information on what percentage of current sales were for future products, but some sources suggest the figure is in the hundreds of millions.
Sources say the government is aware of the efforts by companies to get around the ban but are unsure how to respond.
It seems some may be angry that companies are opposing the administration's efforts to squeeze Huawei, while others support the company's efforts to hold onto a crucial customer.
John Neuffer, the president of the Semiconductor Industry Association (SIA) expressed the frustration that the industry feels about the ban in a statement on their website:
“SIA companies are committed to rigorous compliance with US export control regulations. As we have discussed with the US government, it is now clear some items may be supplied to Huawei consistent with the Entity List and applicable regulations.
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. Over the longer term, SIA remains concerned restrictions on our ability to sell commercial products in major markets will erode the competitiveness of the US semiconductor industry.
We continue to call on the US government to help advance US semiconductor leadership as it works to preserve US national security.”