Huawei Gets Approval from US Officials to Buy Chips for its Auto Business

In a rather surprising turn of sentiment, Washington has begun approving license applications that would allow blacklisted Chinese company Huawei to purchase semiconductor chips for its expanding automotive business.

According to Reuters, which cited people familiar with the matter, the US Department of Commerce has granted numerous licenses worth hundreds of billions of dollars to American suppliers to sell semiconductor chips to Huawei’s auto component business. The latest license approvals come as the telecommunications equipment maker looks to make a shift towards manufacturing products that are less vulnerable to US sanctions.

The Commerce Department’s latest move was met with significant opposition, particularly from US Senator Marco Rubio, whom said the license approvals were “yet another example of President Biden’s failure to protect America’s economic and national security.” According to him, the White House needs to ramp up its restrictions and penalties on Huawei, rather than relax them.

However, according to one of the Commerce Department’s high ranking officials, Cordell Hull, there is little risk to US national security by allowing Huawei access to chips for its auto business. “If it’s truly a commodity product, I think we would want western and allied companies getting that revenue.”

After the US government put Huawei on a trade ban in 2019 in an effort to prevent US companies from selling their products to the Chinese company, Washington ramped up its efforts even more last year, and restricted the sale of chips made with US equipment abroad. As a result, Huawei suffered a sharp decline in its revenue in 2021, after the tightened trade restrictions forced the company to sell a portion of its handset business.

Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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