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U.S. tightens supply of Huawei chips, China claims to counter

U.S. tightens supply of Huawei chips, China claims to counter

On Friday (May 15), the Trump administration took action to prevent global chip suppliers from supplying telecommunications equipment giant Huawei.

The US Department of Commerce announced new regulations to expand the authority of the US government. The U.S. government will require that semiconductors produced overseas using U.S. technology be sold to Huawei before obtaining a sales license. This increases the US government's restrictions on Huawei's supply.

A senior US Department of Commerce official told the media at a telephone news conference on Friday: "This is putting the US first, US companies first, and US national security first."

In response, Huawei, the world's largest telecommunications equipment manufacturer, did not respond to requests for comment.

This act of killing Huawei hit the European stock market. Investors took profit on the day, and several chip equipment manufacturers' stocks fell in the US stock market.

The Chinese government responded quickly. The Global Times said in a report on Friday that Beijing has prepared to include American companies on the "unreliable entity list" as a countermeasure to expand restrictions on Huawei.

Beijing ’s countermeasures also include investigations and restrictions on U.S. companies, including U.S. companies such as Apple, Cisco and Qualcomm, and the suspension of Boeing ’s aircraft purchases.

The regulations of the US Department of Commerce came into effect on Friday, but there is a 120-day grace period. This has also hit TSMC, the largest chip manufacturing contractor and Huawei ’s main supplier. TSMC announced on Thursday that it plans to build a plant in the United States.

TSMC said on Friday that it is “observing closely the changes in US export regulations” and working with external legal advisers, “to conduct legal analysis and ensure that these regulations are fully reviewed and explained.”

The Ministry of Commerce stated that the regulation is designed to prevent Huawei from continuing to "undermine" its reputation as a blacklist, meaning that suppliers must first obtain permission from the US government to sell advanced technology products made in the United States to Huawei.

Secretary of Commerce Ross told the media on Friday that Huawei used a technology loophole in the past to cooperate with foreign semiconductor manufacturers to use American technology; the United States is now specifically to plug this loophole.

Due to national security considerations, Huawei was included in the US Department of Commerce's "Entity List" last year. Washington has accused the company of violating U.S. sanctions on Iran and possibly monitoring customers. Huawei denied these allegations.

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