Biden Strikes at Huawei Again, Revoking Eight Licenses in 2024

The Biden administration has taken significant steps this year to tighten restrictions on Huawei, the Chinese telecoms equipment giant, by revoking licenses that previously allowed certain companies to supply goods to Huawei. This move is part of a broader strategy to pressure the company, which has been perceived as a national security threat by the U.S. government.

According to a document reported by Reuters, the U.S. Commerce Department, which oversees export policy, has revoked eight licenses in 2024 that had permitted shipments to Huawei. This action builds on previous measures taken in May when the Commerce Department announced the revocation of some licenses without specifying the details. The revocations include licenses held by major companies like Qualcomm and Intel, which were reported to have been affected earlier.

The revocation of these licenses is a response to an inquiry by Republican Congressman Michael McCaul, highlighting the Biden administration's ongoing efforts to thwart Huawei's operations. The document provided by the Commerce Department indicates that the revoked licenses involved a range of items, including exercise equipment, office furniture, and low-technology components for consumer items such as touchpad and touchscreen sensors for tablets. These components are widely available in China from both domestic and foreign sources, reducing the impact of their restricted supply from the U.S.

Despite these restrictions, Huawei has continued to show resilience and growth. The company has been able to rebound, surprising many in the industry. For instance, Huawei released a new phone last August powered by a sophisticated chip manufactured by the Chinese chipmaker SMIC, despite U.S. export restrictions on both companies. This new phone led to a significant increase in Huawei’s smartphone sales, which spiked 64 percent year-on-year in the first six weeks of 2024, according to Counterpoint, a research firm. Additionally, Huawei’s smart car component business has also contributed to its resurgence, with the company recording its fastest revenue growth in four years in 2023.

The U.S. government's concerns about Huawei date back to 2019 when the company was placed on a trade restriction list due to fears it could facilitate espionage. Being on this list means that Huawei’s suppliers need to obtain special, often difficult-to-get licenses before they can ship goods to the company. Despite this, suppliers have managed to secure licenses worth billions of dollars, thanks to a policy introduced during the Trump administration. This policy allowed a wider range of items to be shipped to Huawei than is typically permitted for companies on the entity list.

From 2018 to 2023, the Commerce Department approved $335 billion worth of licenses out of a total $880 billion in applications seeking permission to sell to Chinese entities on the entity list. Notably, in Biden's first year in office, the agency approved $222 billion worth of licenses out of $560 billion in applications received that year. This approval rate indicates a significant volume of goods and technology flowing to Chinese parties despite the overarching restrictions.

The revocation of these licenses and the continued scrutiny on Huawei reflect the U.S. government's ongoing efforts to balance national security concerns with economic interests. While the administration has taken a tougher stance on Huawei, it is also navigating the complexities of the global supply chain and the significant economic relationships involved.

The pressure from Republican China hardliners in Congress has played a role in these actions. They have been vocal about the need to take a firmer stance against Huawei, especially after the company’s surprising resurgence in the market. This resurgence, marked by the release of advanced technology despite restrictions, has prompted calls for stricter enforcement and additional measures to prevent Huawei from gaining an edge through U.S. technology.

The Biden administration’s strategy involves not only restricting the supply of certain goods to Huawei but also enhancing the enforcement of existing measures and ensuring that any loopholes are closed. The administration's focus on advanced technologies, such as those used in Huawei’s new phone, underscores the importance of controlling the flow of high-tech components that could enhance Huawei’s competitive position globally.

The impact of these measures on Huawei and its suppliers remains to be fully seen. While the revocations present significant challenges for Huawei, the company’s ability to adapt and find alternative sources or solutions will be a key factor in its ongoing operations. For suppliers like Qualcomm and Intel, the loss of licenses means they will need to navigate the complex landscape of export controls and find new markets or products to mitigate the impact of these restrictions.

In summary, the Biden administration’s revocation of licenses allowing companies to supply goods to Huawei is part of a broader effort to curb the company’s growth and address national security concerns. Despite these measures, Huawei has shown resilience and continues to find ways to innovate and grow. The ongoing developments in this area will be closely watched as they have significant implications for U.S.-China relations, global supply chains, and the technology sector. The administration's actions underscore the complexities of regulating technology flows in a highly interconnected and competitive global market.