The Biden administration has approved licenses for Huawei, the blacklisted Chinese telecom company, to buy microchips from US-based suppliers for its auto component business, according to a report on Wednesday.
Reuters, citing two sources familiar with the matter, reported that the license applications OK’ed by the US are worth hundreds of millions of dollars.
The reported deal is a big win for Huawei, which has been hampered by restrictions imposed by former President Donald Trump on the sale of chips to the firm for use in 5G devices like smartphones.
While the Biden administration kept in place those restrictions, it has recently approved licenses for the sale of chips for use in parts like video screens and sensors. One source told Reuters that some chips sold to Huawei will be used in vehicles that may have other components with 5G capability.
Huawei, founded in 1987 by former Chinese army officer Ren Zhengfei, is the world’s largest manufacturer of both telecommunications equipment and smartphones. US officials have accused the company of helping the Beijing government carry out spying operations — including the surveillance and mass detention of Uighur Muslims in northwest China Xinjiang province.
In 2019, Trump cut off Huawei’s access to US processor chips and other technology needed to make smartphones. Last year, he tightened those restrictions by prohibiting suppliers from using US technology to make chips for Huawei designed by its own engineers. The Trump administration also pushed allies like the UK to exclude Huawei from their 5G networks.
Those actions contributed to a 29.4 percent year-over-year decline in revenue for Huawei in the first half of this year. Part of that was due to the November 2020 sale of its low-cost Honor smartphone brand, a bid to revive the unit by separating it from the sanctions on the parent company.
Sen. Tom Cotton (R-Ark.) told Reuters in a statement that it was “unacceptable for the Biden administration to ease the pressure campaign against Chinese spy companies like Huawei.”
Sen. Marco Rubio (R-Fla.), the vice chairman of the Senate Intelligence Committee, called the license approvals “yet another example of President Biden’s failure to protect America’s economic and national security.”
A Commerce Department spokesman told Reuters that the agency was still applying policies “to restrict Huawei’s access to commodities, software, or technology for activities that could harm US national security and foreign policy interests.”
The news comes amid an ongoing shortage of the computer chips used widely in vehicles, an effect of the quicker-than-expected increase in demand for cars and trucks following a sharp downturn due to the global COVID-19 pandemic.
Last week, Toyota announced it was scaling back production in North America and Japan due to supply chain issues as well as the spread of the Delta variant of COVID-19 in Southeast Asia and elsewhere.
Meanwhile, Nissan’s factory in Smyrna, Tenn. is in the midst of a two-week shutdown due to chip shortages brought on by a COVID-19 outbreak in Malaysia. Production is expected to resume Aug. 30, but analysts warn the hiatus is a sign that the shortage is likely to extend into next year.
With Post wires