The US allows chips to be sold to Huawei's non-5G companies

The US allows chips to be sold to Huawei's non-5G companies

The U.S. is allowing a growing number of chip companies to provide Huawei with components as long as they are not being used for the 5G business, according to Washington-taught people in a potential lifeline for the Chinese group.

Analysts believe this could mean harsh US sanctions against China's leading tech company this year could put overall business less at risk than previously thought. While the sanctions would still be a major challenge for Huawei's 5G business, the company's vital smartphone arm could potentially rebound.

The US Department of Commerce "has told companies in recent talks that while licenses to ship Huawei are being processed with a view to denial, it can be overcome if you can demonstrate that your technology does not support 5G," one said Manager involved in the semiconductor line Dialogue with the department with reference to the most modern telecommunications infrastructure.

Executives at two Asian semiconductor companies said they were optimistic that their license applications to resume shipments to Huawei would be approved. "We have been shown that chips for mobile devices are not a problem," said one of them.

This is a strong indication that the US wants to allow Huawei to stay in the cell phone business

Washington banned companies around the world from making or selling any of the Chinese group's components using US technology under rules imposed in May and tightened in August. Given the central role of US technology in the global semiconductor industry, the sanctions threatened to hinder Huawei's access to chips.

Recently, however, Washington seems more willing to allow companies to ship components for non-5G applications to Huawei. Samsung Electronics' display unit in South Korea announced Tuesday that it had received a US license to ship organic light-emitting diodes or OLED displays for cell phones to Huawei.

"We believe this is a strong indication that the US wants to allow Huawei to stay in the cell phone business because, as we have argued, it does not pose an obvious national security threat to the US," wrote Edison Lee, analyst at Jefferies in a research report.

According to Lee, Japan's Chinese-owned Sony and OmniVision, headquartered in California, have also been licensed to supply Huawei with CMOS image sensors – chips that are used in smartphone cameras.

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OmniVision did not respond to a request for comment.

At an earnings meeting on Wednesday, Sony declined to comment on whether it had been granted a license to resume sales of its image sensors for use in Huawei smartphones.

Sony was forced to cut its earnings forecast for the image sensor business for the full year by 38 percent after it ceased sales to Huawei on September 15.

The US government, which has been arguing for more than a decade that Huawei's telecommunications infrastructure could pose a security threat, originally put the Chinese company on a list of companies subject to export controls last year.

The following year, more than 300 companies applied for licenses to continue doing business with Huawei, about a third of which were granted. The US chip manufacturers Intel and AMD received a license, among other things. Intel continued to supply Huawei with processors for servers in the cloud computing business.

After a second wave of sanctions was announced in May, Huawei began holding on to the chips it needs to power its telecommunications network devices such as base stations. According to industry executives, the telecommunications infrastructure unit, which sets up and manages cellular networks for network operators from China Mobile to Deutsche Telekom, has stocks of around two years.

However, Huawei's consumer business, which accounts for more than half of its sales, was harder hit. The stricter US restrictions announced in August not only prevent contract chipmakers from making the latest smartphone processor developed by Huawei, but also prevent vendors like Taiwan's MediaTek from selling off-the-shelf chipsets.

Jefferies & # 39; Lee said if Washington were willing to let Huawei's smartphone business survive, both US chipmaker Qualcomm and MediaTek could obtain licenses later this year to sell certain chips needed for smartphones Huawei resume.

However, industry experts warn against too high expectations on this matter and point to the unpredictable political decisions of the Trump administration.

Additional coverage from Song Jung-a in Seoul