The globalized nature of chip manufacturing and the ubiquity of US EDA software and manufacturing equipment means that the US is effectively taking control of Huawei's chip supply. The intention is to prevent Huawei's progess for reasons of national security the Department of Commerce said.
The move clearly runs the risk of provoking a damaging round of escalation and retaliation in a trade war between the US and China.
The statement from the Bureau of Industry and Security (BIS) specifically mentioned Huawei and said that Huawei had been trying to undermine US export controls by using external foundries to make its chips. The BIS added Huawei and 114 overseas affiliate companies to the so-called "entity list" in May 2019 and said that Huawei has continued to use U.S. software and technology to design and make semiconductors.
The Chinese authorities responded by threatening to ban US companies such as Apple, Qualcomm and Cisco.
"Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort. However, that effort is still dependent on U.S. technologies,” said Secretary of Commerce Wilbur Ross, in a statement. "This is not how a responsible global corporate citizen behaves. We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests."
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