Introduction
The ongoing tech war between the US and China has seen a significant development in 2024. The Biden administration has revoked eight licenses that previously allowed companies to export goods to Chinese telecom giant Huawei. This move aims to pressure Huawei, which has started to rebound despite the US sanctions. The revocation of these Licenses highlights the intensifying efforts of the US government to curb Huawei’s technological advancements and influence.
The US Commerce Department cited national security concerns as the primary reason for revoking the licenses. They suspect that Huawei equipment could be used for spying by the Chinese government, which Huawei denies.
According to some reports, the revoked licenses included those for tech giants like Intel and Qualcomm, potentially impacting Huawei’s access to chips for laptops and smartphones.
The move by the Biden administration is believed to be partly due to pressure from Republican lawmakers who have been critical of allowing any US technology to reach Huawei.
The revoked licenses could significantly impact Huawei’s ability to manufacture certain products, particularly those requiring advanced chips. However, Huawei has been developing its own chipmaking capabilities and may look for alternative suppliers outside the US.
The Chinese government strongly condemned the US decision, calling it an abuse of national security concerns and a restriction on global trade.
The Biden administration is taking to new measures to thwart Huawei, which has started to rebound despite US sanctions
Background
Huawei, a global leader in telecommunications and electronics, has been a focal point in the US-China tech rivalry.
The US government has long expressed concerns over Huawei’s potential threat to national security, alleging that the company could use its technology for espionage.
In response, the Trump administration placed Huawei on a trade restriction list in 2019, requiring US suppliers to obtain special licences to sell goods and technology to the company.
Despite these restrictions, many licences were granted, allowing billions of dollars worth of transactions to continue.
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The Current Situation
In 2024, the Biden administration took further steps to hinder Huawei’s progress by revoking eight additional Licenses.
These licences, which were originally granted to companies like Qualcomm and Intel, allowed the export of various goods to Huawei.
The Commerce Department’s decision to revoke these licences is part of a broader strategy to restrict Huawei’s access to critical technologies and components.
According to a document prepared by the Commerce Department in response to an inquiry by Republican Congressman Michael McCaul, the revoked licences included those for exporting “exercise equipment and office furniture and low-technology components for consumer mass-market items, such as touchpad and touch-screen sensors for tablets.”
These items are widely available in China from both domestic and foreign sources.
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The Impact on Huawei
Despite these revocations, Huawei has shown resilience and adaptability. The company surprised the industry in August 2023 by releasing a new smartphone powered by an advanced chip manufactured by Semiconductor Manufacturing International Corporation (SMIC), a Chinese chip maker.
This development came despite stringent US export restrictions on both Huawei and SMIC.
The new smartphone led to a 64% year-on-year spike in Huawei’s smartphone sales in the first six weeks of 2024, according to research firm Counterpoint.
Additionally, Huawei’s smart car component business has contributed to its resurgence, with the company achieving its fastest revenue growth in four years in 2023.
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Strategic Implications
The US government’s revocation of licences reflects its strategic intent to prevent Huawei from regaining its market dominance.
The Biden administration’s actions are part of a larger effort to ensure that Chinese companies do not gain access to advanced technologies that could be used for military or strategic purposes.
The revocation of these licences also underscores the pressure from Republican China hardliners in Congress, who have been advocating for stricter measures against Huawei.
The aim is to further isolate the company and limit its ability to procure critical technologies and components from US suppliers.
Broader Context
The US-China tech war extends beyond Huawei, affecting a wide range of companies and industries.
From 2018 to 2023, the Commerce Department approved $335 billion worth of licences out of a total of $880 billion in applications seeking permission to sell to Chinese entities on the restriction list. In Biden’s first year in office alone, the agency approved $222 billion worth of licences out of $560 billion in applications received.
Conclusion
The Biden administration’s decision to revoke licences for exporting goods to Huawei marks a significant escalation in the US-China tech war.
While these measures aim to curb Huawei’s technological advancements, the company’s resilience and strategic partnerships continue to pose challenges for US policymakers.
As the global tech landscape evolves, the actions of both the US and China will have far-reaching implications for the industry and international relations.
