US weighs sanctions against Huawei’s chip network

The United States is thinking of blacklisting a number of Chinese chipmakers that helped Shenzhen-based Huawei Technologies bypass its sanctions.

The targeted companies include Qingdao Si’En, SwaySure and Shenzhen Pensun Technology Co (PST), Bloomberg reported on Wednesday, citing people familiar with the matter. 

These entities, most of which are either acquired or being built by Huawei, were accused of exploiting current loopholes in the US chip export restrictions. 

Citing an analyst, the Bloomberg report said it’s highly likely that more Chinese companies will be added to the US entity list. As of now, the US has not yet made any final decisions. 

The report said the Biden administration is also considering imposing sanctions on ChangXin Memory Technologies Inc, Shenzhen Penguin High-Tech Co and SiCarrier Technologies. 

While the US is seeking to strengthen its curbs against Huawei, many observers were puzzled by Washington’s decision to allow Intel to ship a large quantity of chips to Huawei.

Citing two people familiar with the situation, Reuters reported on March 12 that Intel has survived an effort to halt hundreds of millions of dollars’ worth of chip sales to Huawei, which used them to make laptops and gain global market share. 

The report said AMD found it unfair that it did not receive a license similar to what rival Intel was granted. 

Republican Senator Marco Rubio said the Biden administration should revoke Intel’s license to sell to Huawei immediately, or the US Commerce Department should not consider granting any subsidies to Intel for its US expansion.

He said no American company, especially those receiving taxpayer funding, should be fueling innovation by Huawei.

Huawei, Intel, the White House and the Commerce Department declined to comment on the Reuters report. AMD also did not respond to media enquiry for this.  

Some Chinese commentators said more sanctions against Huawei will only hurt US businesses. 

“As an important company in the US chip industry, Intel has a special role to protect the country’s national security,” a Shanghai-based writer says in an article published on Wednesday. “At the same time, the US government is aware that a full chip export ban imposed on the Chinese market may hurt its domestic technology industry.”

“The dilemma shows the complexity of the technological competition between China and the US, as well as the interdependence between the two countries in the field of science and technology,” he says. 

That writer adds that, as China has in recent years achieved significant progress in the development of its chips sector, it’s inevitable that it will have head-to-head competition with the US. He says both countries should try to seek mutual benefit.

Last August, Huawei launched its flagship smartphone Mate 60, which used the Kirin 9000S, a 7-nanometer chip made by the Semiconductor Manufacturing International Corp (SMIC). In December, it unveiled a new electric vehicle called M9, which used the Kunpeng 920, another self-developed 7nm chip. 

“The debuts of Huawei’s Mate 60 and M9 are a powerful statement that a technology blockade cannot suppress innovation,” Zhang Zhikun, a Henan-based writer, says in an article published on Tuesday. “Many sanctioned Chinese technology firms have gained courage and strength after seeing Huawei’s achievements.”

“For some time, the US curbs against Chinese technology firms have seemed to be insuperable, but in fact they stimulated the potential of China’s technology sector,” he says. “China was a follower in the technology world, but now it has become a leading player.”

Zhang says China’s breakthroughs in artificial intelligence, 5G and quantum computing technologies have also changed the competitive landscape of the global technology industry.

Last October, US Commerce Secretary Gina Raimondo said reports of Huawei’s chip breakthrough were “incredibly disturbing.”

She said more resources were needed for the enforcement of the export controls, Washington’s top tool in its chip war with China. She also said her department should be granted more power to check whether any technology transactions might pose national security risks. 

Read: Huawei’s new chip supplier draws US attention

Follow Jeff Pao on Twitter at @jeffpao3