Suppliers of Huawei and SMIC have been granted billions of dollars worth of licenses from November through April to sell these firms goods and technology despite both brands being in the trade blacklist in the US.

According to Reuters, documents released by Congress showed earlier this week that 113 export licenses worth 61 billion US Dollars were approved for suppliers to ship products to the Chinese telecom giant along with another 188 licenses that are worth nearly 42 billion US Dollars were approved for China’s major chipmaker SMIC (Semiconductor Manufacturing International Corp). The data also revealed that more than 9 out of 10 license applications were granted to SMIC suppliers, while around 69 percent of requests were granted to ship to Huawei.

The US House of Representatives Foreign Affairs committee voted to grant a request to release the licensing data that was received from the Commerce Department back in May. These numbers have led to an outcry in Washington that are against these Chinese firms receiving access to advanced US made technologies. Republican Senator Marco Rubio told Reuters that President Joe Biden needs to explain the reason behind these companies continuing to receive “waivers.”

The government official added that “It is just another example of President Biden not taking the economic and security threat posed by the Chinese Communist Party seriously.” Meanwhile top Republican member Michael McCaul said that “It’s clearly in our national interest to increase transparency and public scrutiny on how our nation transfers its technology to an adversary.”

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US firms like the Lam Research Corp and Applied Materials Inc are struggling to obtain an export licenses from the US government to sell chip related equipment to SMIC, China’s largest chip maker.

According to a Reuters report, the US government has been slow to approve the license for American companies, despite the ongoing global chip shortage. Furthermore, licenses for the US suppliers, which are estimated to ship equipment and materials worth 5 billion US Dollars, have yet to be granted. At the moment, it is reported that some licenses have been granted to certain firms, which included a small number of expensive equipment.

After the Chinese semiconductor based firm was banned, the US government faced multiple complaints from American companies that traded with SMIC. But as policy shifts with the arrival of a new US President, Joe Biden, it remains uncertain what direction the administration would take in dealing with Chinese firms like SMIC, which produces chips for various American brands like Qualcomm and others.

For those unaware, SMIC faced the export trade ban after the Trump administration accused the company of having ties with China’s military. It was placed on the Entity List as well, which would require US based firms to acquire a license from the government before selling equipment or materials with the blacklisted firm. The new administration has yet to make a decision on the license application, but the verdict is expected to arrive within a month, so stay tuned for more as we will be providing updates.

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SMIC, China’s largest chip maker, has apparently received a license to import matured process equipment from American firms. The news arrives amid the global chip shortage, which experts believe was further aggravated by the Trump-era regulations.

According to a GlobalTimes report, the Chinese semiconductor based firm has received license to trade with at least one US based supplier. Although, the government has yet to allow SMIC access to advanced processes like 7nm or below technology. Experts believe that the primary reason for allowing SMIC to import with America is due to the Trump administration’s sanctions disrupting supply chains and even hurting the interests of many local firms.

The report adds that the Chinese chip maker has received access to US licenses to import equipment for use in mature processes, with one US supplier already receiving the license, while two other firms are awaiting approval at the moment. Both companies are also expected to likely receive the license to trade with SMIC as well. Currently, the Chinese tech giant has access to 14nm and above processes and not the 10nm or below processes.

Xiang Ligang, an independent analyst, added that the US will probably gradually ease supply restrictions of chip equipment to China based firms, but are also likely to control the advanced technologies like 7nm or below for a while. Xiang further added that “The US government ban on Chinese semiconductor sector has not only disrupted global semiconductor supply but also hurt the interests of their own companies as well. I believe the Biden administration is moving to correct the situation.”

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Earlier this week, the US Department of Commerce announced that it will be extending the license which allowed US based companies to continue working with Huawei Technologies Co Ltd, the Chinese tech giant, until the 15th of May 2020.

For those unaware, Huawei was hit with a ban back in 2019, which had the company lose partnering rights with US based companies. But since then, special licenses were granted to companies that applied for it, to allow temporary collaboration with the Chinese electronics company. Now, it seems like Huawei has received another boon as the Trump administration has just extended the licenses till 15th May.

The original license was a temporary measure and had already been extended till 1st April 2020. Through the license, companies like Microsoft can continue providing their services to Huawei, like Window’s for laptops as an example. Although the ban was enforced, the US Commerce Department had allowed it to still purchase from US companies to avoid disruption in the market.

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Huawei is a leading figure in telecommunications and by its extension 5G networking. The company provides relatively more affordable equipment and tools and had already been providing the same for 4G modems to certain US telecom providers. So on a larger scale, banning Huwaei would have affected US customers. Thus, licenses were issued and the Commerce Department even made a public statement asking about the “impact on your company or organization if the temporary general license is not extended?”

This was mainly targetted at rural carries in America which provided services to customers in remotes region with the United States. Similar to Huawei, ZTE Corp was also designated as a national security risk. So, the move arrives as a breath of fresh air to Huawei that can see continued operations for a couple of months longer in the region.

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On 18th December 2019, Micron Technology Inc stated that it is expecting a recovery after a “cyclical bottom” in the second quarter earlier this year. The primary reasons for its projected recovery in the arriving year are due to the company receiving all requested licenses to supply its products to its biggest client, Huawei.

Micron was facing stagnancy in its growth in the memory market from the beginning of the year. However, the main blow arrived when its largest customer got placed on the Entity List. Huawei, the smartphone manufacturer, was banned from the US Commerce Department in early 2019 which had led many US based companies to cut their business ties with it.

A few of those include Google with its Android OS platform, ARM with its chipset architecture and even Micron Technology for its memory-based chips. Initially, when the US Government imposed the ban on Huawei, many American companies had also been against the move since they had heavily relied on the Chinese tech giant.

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Since Huawei is also one of the leading telecom companies that supply advanced 5G networking infrastructure; a few of the local telecom companies also suffered when the ban was imposed. All of this points to a domino effect that spans multiple corporations if a key player in the market gets affected.

According to the Chief Executive of Micron, Sanjay Mehrotra, the company is expecting business to recover by the third quarter of 2020. The recovery is made possible by the licenses to work with Huawei being granted after the declining performance in Q2 2019. In June, Micron had also stated that it could legally ship some of its products to Huawei even during the ban was enforced. Although whether the company received the license when the US Government began granting them in November is still unknown.

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Huawei announced the new MateBook D series of notebooks alongside the new MatePad Pro and Sound X speakers earlier today in China. The MateBook D came with Windows 10 pre-installed, which might have surprised a lot of readers. So it turns out that the U.S. commerce department has recently approved some licenses to trade with Huawei, including the one requested by Microsoft.

The Redmond giant revealed in a statement to Bloomberg a couple of days back that it has been granted a license to “export mass-market software” to Huawei. While the company didn’t elaborate on the term ‘mass-market’, we now know that it includes Microsoft’s Windows 10 platform.

Prior to this, Huawei pre-installed Deepin Linux on its MateBook models as a replacement to Windows 10. The telecommunications giant wasn’t allowed to use Windows 10 on its MateBook models ever since it was added to the U.S. government’s Entity List. So it was selling cheaper versions of its MateBook laptops running Deepin Linux onboard. Despite the advantages of having a Linux setup, Windows as a platform doesn’t have viable replacements. So getting the supply for Windows 10 back on its notebook models should come as a huge reprieve for the company.

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The U.S. commerce department reportedly got around 290 requests for a license to trade with Huawei last week. Unfortunately, only a handful of these requests are expected to be approved. We have no word on which other companies have been granted licenses apart from Microsoft.

To recall, Microsoft’s President Brad Smith, was vocal about how the U.S. ban on Huawei was both unfair and un-American. Microsoft had reportedly approached the Trump administration to talk about the ban but would often get vague replies like, “Well, if you knew what we knew, you would agree with us”.

Microsoft’s license to trade with Huawei is a step forward. However, the company’s struggle is far from over. There are still companies like Google who are barred from selling its software to the Chinese giant. And Google is very important for Huawei, who is currently the world’s second-largest smartphone manufacturer. In fact, it could have even surpassed Samsung by this year-end to become world number one. But without Google services onboard, Huawei smartphones are essentially Dead on Arrival (DOA) in the international markets.

So it’s extremely important for Huawei to get access to Google services as soon as possible. Unfortunately, given the current situation, we don’t know if that’ll happen anytime in the near future.

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