U.S. continues to target Huawei: Proposes new bill to tighten chip purchase

Efe Udin

December 10, 2024

Since 2019, Huawei has been subjected to multiple bans by the United States Government. Over the years, the U.S. government has consistently reviewed the ban and tightened it, making it more difficult for Huawei to purchase relevant chips for its mobile phones. Despite these bans, Huawei’s mobile phone business continues to stay afloat, albeit only in the Chinese market. A fresh US defense bill could further tighten the rules on selling chip tools and tech to Huawei. The National Defense Authorization Act (NDAA), revealed on Saturday, aims to block Huawei from getting semiconductors and related tools.

What the Bill Covers

The NDAA includes a rule that stops Defense Department contractors from working with Huawei or its allies. This means chip firms and tool makers will face a tough choice: stop dealing with Huawei or lose the chance to bid for Pentagon deals. The US defense budget for fiscal 2023 stands at $460 billion. This makes Pentagon deals a major draw for many tech firms. Losing such business would pose huge risks for those firms that opt to keep ties with Huawei.

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A Renewed Focus on Huawei

The bill is the latest step in the US push to slow Huawei’s growth in the tech world. The US has long viewed the company as a risk, citing ties to the Chinese state. Earlier in 2024, the US revoked the rights of Qualcomm and Intel to sell chips to Huawei. This new bill builds on those moves, making it harder for the company to buy the tools needed for chip-making.

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If passed, the bill will become law 270 days after being signed. That gives firms less than a year to cut ties with Huawei or risk their Pentagon links. This timeline gives affected companies a window to adapt their plans. However, for the company, it could spell deeper hurdles in its tech goals.

The United States has made its determination to curtail China’s influence in the global technology sector abundantly clear. Huawei, recognized as a significant player in semiconductors and 5G technologies, remains a primary target in this strategic effort. For semiconductor companies, the implications are substantial. Maintaining favourable relations with the Department of Defense is critical, yet severing connections with Huawei could result in considerable financial losses. If enacted, this legislation is poised to exacerbate the technological divide between the United States and China. As corporations and governments strategize their next actions, the international technology landscape is likely to undergo significant transformations in the coming months.

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