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China’s Huawei Unlikely To Be Out of US’ Restricted Entities List

China’s Huawei Unlikely To Be Out of US’ Restricted Entities List

The US Innovation and Competition Act that has earmarked USD 54.2 billion towards shoring up America’s competence on a number of technological fronts, has left out China’s Huawei Technologies on a list of restricted entities, banning it from gaining access to US hardware and software.

The bill currently awaits passage in the US House of Representatives has dispelled any illusion that the 46th American president would unwind the policies of his predecessor Donald Trump, according to South China Morning Post (SCMP).

Further complicating matters is Huawei’s founder Ren Zhengfei, whose eldest daughter Meng Wanzhou has been awaiting extradition in Vancouver to face trial in the US since 2018. In February, Ren acknowledged that it would be “extremely difficult to remove Huawei from the entity list”.

Huawei, a closely held company that has been reporting its financial results since 2000, posted its weakest annual revenue growth in a decade last year.

“Given that the US intends to restrict Huawei’s development in high-end areas such as 5G… the probability of the US lifting its ban on smartphone chips for Huawei in the short term is scant,” said Arisa Liu, a chip industry analyst with the Taiwan Institute of Economic Research.

US’ efforts to cut one of China’s biggest tech companies down to size has only added to Beijing’s urgency in seeking self-sufficiency in an array of strategic technologies, such as semiconductors, SCMP reported.

Serving over a third of the world’s population, Huawei was accused by US officials of being a national security risk because of alleged ties with China’s military and security agencies, prompting Ren to publicly defend his company amid the US-China tech war.

During Trump’s tenure, Huawei was singled out as a competitor to US interests under the guise of cybersecurity and national security threat to the US. Trump made it clear in 2018 that the US could kill a Chinese company if it wanted to, by banning US companies from exporting to ZTE, Huawei’s rival supplying telecommunications systems and 5G infrastructure.

On December 1, 2018, Meng was arrested in Canada while transferring planes at the Vancouver airport, at the request of the US government.

Huawei’s fate by May 2019 was sealed when the Commerce Department added Huawei and 70 affiliates to its Entity List, banning the telecoms giant from buying parts and components from US companies without US government approval.

Eric Xu Zhijun, a rotating chairman at Huawei, said earlier this year that Huawei could no longer find any chip manufacturer to make chips for it.

Huawei’s future remains gloomy amid the US chip blockade and amid uncertainty as the company transforms from a pure hardware provider into a software services company, including cloud and its own Harmony operating system, SCMP quoted analysts.

“The moves to electric vehicle systems and now major software development seem to be more of a response to government expectations rather than business demands or market necessities,” said Brock Silvers, chief investment officer at Hong Kong-based Kaiyuan Capital. “Both efforts are far from Huawei’s core, and any success is far from assured.”

In light of the worsening relations between the US and China, Washington has labelled Chinese tech companies -Chinese telecommunications giant Huawei, along with ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology and Dahua Technology- as national security threats.