US Blocks Shipment Of Semiconductors To Huawei In Latest Procovation Of Beijing

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by Tyler Durden
Friday, May 15, 2020 - 02:31 PM

Fox Business Network has confirmed a Reuters report from earlier this morning claiming the Trump Administration blocked a shipment of semiconductors to Huawei on Friday, prompting threats from Beijing.

Earlier, the news set off the anxieties about the deteriorating US-China bilateral relationship that sent markets lower at the open.


According to Reuters, a new policy unveiled by the Commerce Department has expanded US authority to require licenses for sales to Huawei of semiconductors made abroad with US tech, which will vastly expand the US's power to stop exports and cut off vital supplies of semiconductors that Huawei will have difficulty sourcing elsewhere.

"This action puts America first, American companies first, and American national security first,” a senior Commerce Department official told reporters in a telephone briefing on Friday.

Unsurprisingly, the reaction from China was swift: China’s Global Times warned that Beijing was ready to put US companies - including Qulacomm and Apple - on an “unreliable entity list" as part of its countermeasures.

In addition to these restrictions, later Friday morning, the Trump administration dispatched Commerce Secretary Wilbur Ross for an interview on Fox Business. Ross (likely the source of the anonymously sourced comment above) explained that the department is changing its policies to block Huawei's use of American software in overseas manufacturing, closing a loophole that the Chinese manufacturer had relied on to circumvent US sanctions.

The Commerce Department's Bureau of Industry and Security is revising its foreign-produced direct product rule and the "Entity List" - the US blacklist that Huawei was supposedly added to more than a year ago, though the US has been reluctant to bring the hammer down so far - to "narrowly and strategically: target Huawei’s acquisition of semiconductors that are the direct product of U.S. software.

"There has been a very highly technical loophole through which Huawei has been able to use U.S. technology with foreign fabrication producers," Ross said. "This first rule about foreign direct product is a very highly tailored thing to try to correct that loophole. That will have a very powerful impact. We never intended that loophole to be there."

Watch below:

Threatening the viability of a company like Huawei is a major escalation on behalf of the US. At this point, we're starting to wonder if Trump plans to distract from his handling of the virus response by starting WWIII.