Huawei suppliers push to reverse Trump’s last minute blows

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FILE PHOTO: Women walk past a Huawei store at a shopping complex in Beijing

By Alexandra Alper and Karen Freifeld

WASHINGTON (Reuters) – Semiconductor firms are seeking extra time to appeal last-minute Trump administration moves to block sales to Chinese telecoms company Huawei, hoping against the odds that the Biden administration will reverse course, five sources said.

Several company executives who declined to be identified by name said they ultimately do not think the Biden administration will significantly soften the hard-line position. “Everyone is deflated,” said one company executive.

Billions of dollars of U.S. technology and chip sales to Huawei hinge on how the Biden administration applies export restrictions the Trump administration put in place.

The companies hope that, with more time to make their cases before an interagency panel and a potential policy shift, at least some of the rejected Huawei sales will be allowed.

The U.S. Commerce Department did not respond to requests for comment. A Huawei spokeswoman said the company does not have any insight into the licensing process at the agency.

Days before Republican President Donald Trump left office on Jan. 20, the administration notified Huawei suppliers, including chipmaker Intel Corp, that the government was revoking certain licenses to sell to Huawei and intended to reject dozens of applications for others, Reuters reported. [L1N2JS0G3]

    The surprise flurry of “intent to deny” notices were among last-minute, tough-on-China moves aimed at boxing Democratic President Joe Biden into hard-line policies against Beijing and cementing Trump’s legacy.

Among the decisions, the Trump administration denied 116 license applications worth $119 billion and approved four worth $20 million, according to a Commerce Department document dated Jan. 13 and seen by Reuters. Another 300 applications with stated values of $296 billion were pending, the document said.

Some companies whose license applications were rejected asked the Commerce Department for more than the standard 20 days to appeal their denials, the sources said. The department has granted 90-day extensions to some of the companies, the people said.

    Huawei was placed on a trade blacklist by Trump in May 2019 over national security concerns after it was accused of being capable of spying on customers, as well as intellectual property theft and sanctions violations. Huawei has denied wrongdoing.

Before the January decisions, the U.S. government approved about $87 billion worth of applications for sales to Huawei and denied $11 billion since Huawei was blacklisted, according to the Commerce document.

‘UNTRUSTED VENDOR’

The Biden White House has described Huawei as an “untrusted vendor” and a national security threat. Biden’s nominee for commerce secretary, Gina Raimondo, pledged to protect U.S. telecoms networks from Chinese companies but declined to commit to keeping Huawei on a trade blacklist.

To remove the company from the blacklist, the Commerce Department would have to certify to Congress that Huawei has mitigated the national security threat it poses and that the firm has resolved charges of sanctions violations, according to a 2019 law.

     “I don’t think you will see a change in policy on Huawei,” said James Lewis of the security think tank CSIS. “I think (the Biden administration) is mainly signaling, ‘We are going to do the same thing, but try to do it in a more business-friendly way.'”

The Biden administration is reviewing China policy, and sources say it is too early to know what path the president will take on Huawei.

Trump had an inconsistent approach to Huawei, opening the door to more sales when he was seeking a trade deal but then coming down harder as tensions began rising over the coronavirus and Beijing’s crackdown on democracy activists in Hong Kong last year.

But few companies expected the big batch of rejections in mid-January, including license requests for chips used in 4G phones.

“Eventually, we determined if the item – it could be a memory chip or it could be something else – was capable of supporting a 5G application, then we denied it, even if it was not exclusive to 5G,” said former Commerce official Corey Stewart, a China hard-liner who joined the Trump administration in November and authored the Commerce document seen by Reuters.

(Reporting by Alexandra Alper and Karen Freifeld; Editing by Chris Sanders, Cynthia Osterman and Jonathan Oatis)

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