In the last days of Trump Administration, action was taken to penalize any U.S. company that sells into the Huawei supply chain, including chipmaker Intel. The action revokes certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply telecommunications firms. The action will continue Trump’s hardline China policies.
The Semiconductor Industry Association (SIA) made neutral comments and the semiconductor companies did not comment.
Now, companies will receive an “intent to deny” notice with 20 days to respond. Then, the Commerce Department has 45 days to advise them of any change in a decision or it becomes final. Companies would then have another 45 days to appeal.
Economically, this latest action places nearly $120 billion worth of goods and technology on the back burner. The Commerce Department’s decision will cause these goods to be delayed even longer, with the possibility that they may, all or in part, become unusable.
Banning or restricting access to silicon and semiconductor supply chains for Huawei, ZTE and others may open the flood gates of severe economic fallout in the tech sector, particularly 5G and 6G.
Furthermore, Huawei is building its own chipset production in a new factory in Shanghai to circumvent these restrictions. American semiconductor companies generate a substantial portion of their revenues from sales to China. Assuming nothing changes, the demand erosion would have a long-term impact on the U.S. semiconductor industry.