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US govt restricts Huawei from procuring American chips, semiconductors; adds 38 more affiliates to Entity List

The US Department of Commerce added 38 other Huawei affiliates to its ‘Entity List’ on August 17, thereby increasing American restrictions on import, export and use of American technology by the Chinese technology company, the Department announced. Through other amendments that the Department made to its rules, Huawei and its affiliates will have to seek US government’s licence before obtaining non-US chips that use American or comparable technology.

The Department’s Bureau of Industry and Security also imposed licence restrictions on any transactions that include Huawei or any of its now 108 affiliates on the Entity List. News agency AFP first reported this development.

This means that if Huawei or any of its 108 affiliates on the Entity List act as buyers, intermediaries or users of certain American technology, including American semiconductors, the company will have to seek a licence from the Department of Commerce, thereby bringing all such transactions within the direct oversight of the US government. On June 30, the Federal Communications Commission of the US had designated Huawei and ZTE as national security threats.

The Department of Commerce had added Huawei and 70 of its affiliates to the Entity List in May 2019. The Entity List, as per the Department’s website, is a list of foreign entities — including individuals, businesses, government and private organisations and other legal persons — “that are subject to specific license requirements for the export, re-export and/or transfer (in-country) of specified items”. The List is a part of its Export Administration Regulations (EAR).

A number of senior officials within the Trump administration have repeatedly called Huawei a threat to USA’s national security. Former National Security Advisor John Bolton said that taking control of 5G through “what seemed to be commercial companies like Huawei and ZTE” is a long-term Chinese strategy to assert its hegemony over Asia.

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Home Ministry will decide if Huawei can bid in Indian 5G trials

We had earlier reported that the Department of Telecommunications told the Parliamentary Standing Committee on IT on August 11 that the decision to allow companies such as Huawei and ZTE to bid for participation in 5G trials in India would need to be discussed with the Ministry of Home Affairs. The Home Ministry would then decide whether allowing such companies would pose a risk to the national security. During this meeting, much emphasis was also laid on developing 5G technology and its hardware within India itself.

Although India had approved Huawei and ZTE’s participation in 5G trials, after the Indo-China border clashes in June and the subsequent Indian ban on 59 Chinese apps, the Indian government is has been reconsidering its decision. BSNL has also cancelled a 4G supply tender so that it can be reworked to make Chinese vendors ineligible.

Reliance Jio has sought to capitalise on this uncertainty. On July 15, at the company’s annual general meeting, Reliance chairperson and managing director Mukesh Ambani had announced that Jio is now ready to deploy 5G network trials in India as soon as spectrum is available and that the 5G technology was built “from scratch” by Reliance employees. Playing on the same fear earlier, during US President Donald Trump’s visit to India in February 2020, Ambani had proclaimed before him that Jio is the only network in the world that doesn’t have a single Chinese component in its network.

Concerns over Huawei in Europe

The UK announced in July that telecom equipment from Huawei will be phased out of the country’s 5G infrastructure by 2027. The British government had initially allowed it, but then reconsidered its decision.

In January, the European Union had told member states that they can use 5G equipment from high-risk vendors, such as Huawei, although there will have to be strict regulations in place to counter any potential national security threat.

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