Good News Or Bad? Huawei License Applications Worth, Hundreds of Millions, Approved By U.S. Officials

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Soveena | 02-09-2021 11:45 AM

License applications worth hundreds of millions of dollars have been approved by U.S. officials for the world's largest telecommunications equipment maker, Huawei, to buy chips for its blooming auto component business. 

Previously, Huawei had been facing trade restrictions imposed by the Trump administration on the sale of chips and other parts used in its network gear and smartphones businesses. In addition to that, the Biden administration has also been denying licenses to sell chips to Huawei for use in or with 5g devices. 

According to Reuters, the U.S. has granted licenses authorising suppliers to sell chips to Huawei for vehicle components that include video screens and sensors. Due to this, the company has moved its business towards items less liable to trade bans in the U.S. 

"It's unacceptable for the Biden administration to ease the pressure campaign against Chinese spy companies like Huawei," said Republican Senator Tom Cotton. 

It was also mentioned that the government is granting licenses for chips in vehicles that might have other components with 5g capability.

“The government continues to consistently apply licensing policies to restrict Huawei's access to commodities, software, or technology for activities that could harm U.S. national security and foreign policy interests,” said the U.S. Department of Commerce spokesperson. 

“The Commerce Department is prohibited from disclosing license approvals or denials,” he added.

"We are positioning ourselves as a new component provider for intelligent connected vehicles, and our aim is to help car OEMs (manufacturers) build better vehicles," a Huawei spokeswoman mentioned. 

"If it's truly a commodity product, I think we would want western and allied companies getting that revenue. Standing alone, I don't see a huge (national security) risk," said a high-ranking official in the Commerce Department during the Trump administration, Cordell Hull. 

Due to Huawei being put on a U.S. Commerce Department trade blacklist in 2019, a ban on U.S. goods and technology sales to the company without special licenses was implemented. Following that, the U.S. also campaigned for allies to freeze out Huawei from their 5G networks over spying concerns that Huawei has denied. 

The company reported its most significant ever revenue drop in the first half of 2021. 

As mentioned by the company’s rotating chairman Eric Xu, a collaboration with three state-owned Chinese carmakers have taken place. Among them is BAIC Group that will supply "Huawei Inside", an intelligent vehicle operating system. 

Despite suppliers already having received licenses that authorise the sale of tens of millions of dollars of chips to Huawei, the company has asked that they apply again and request a higher value of one or two billion. 

Chief Marketing Officer at Supply Frame, Richard Barnett, said that Huawei is in the early stages of investing in the $5 trillion automotive markets that have significant potential growth inside and outside China.

"Cars and trucks are now computers on wheels. That convergence is what's driving Huawei's strategic focus to be a bigger player in that area," he added.

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