More than 130 US firms request licences to sell to Huawei

No licences have been granted to US suppliers since the Chinese telecommunications giant was blacklisted in May.

Huawei logo in in Warsaw, Poland, June 2019
Despite being blacklisted by the US Commerce Department in May, Huawei's revenues accelerated in the first half of this year, growing 23.2 percent [File: Kacper Pempel/Reuters]

The United States Commerce Department has received more than 130 applications from companies for licenses to sell US goods to China‘s Huawei Technologies Co Ltd, three sources said, nearly two months after President Donald Trump said some sales would be allowed.

But the Trump administration has not yet granted any licences for sales to the blacklisted company, said the people familiar with the process, who spoke to the Reuters news agency on condition of anonymity.

The standstill coincides with mixed messages from Trump in the US-China trade war, which have dimmed hopes for prompt decisions on licence applications to sell to Huawei, the world’s top producer of telecoms equipment.

That has raised the spectre of billions of dollars of lost sales for chipmakers, software companies and others in Huawei’s US supply chain.

“Nobody in the executive branch knows what (Trump) wants and they’re all afraid to make a decision without knowing that,” said William Reinsch, a former Commerce Department official.

Last week, Trump promised to raise tariffs on $550bn in Chinese imports, hours after China imposed new levies on $75bn in US goods. He then softened his tone towards China at the G7 leaders’ meeting over the weekend, saying he thought the world’s two largest economies would reach a deal to end the tit-for-tat trade war that has roiled markets and hammered growth.

The current number of licence applications, not previously reported, far exceeds the 50 or so that US Commerce Secretary Wilbur Ross disclosed receiving in July.

A spokesman for the Commerce Department said: “The interagency process, weighing licence requests concerning Huawei and its non-US affiliates, is currently ongoing.”

Huawei did not immediately respond to a request for comment but has called for the US to remove the company from the so-called entity list and put an end to what it called “unjust treatment.”

Huawei, the world’s number 2 smartphone maker, was placed on the list because of US national security concerns in May, when trade talks with China broke down. Sales of US goods are mostly banned to companies on the list, unless suppliers obtain special licences, which must overcome tough scrutiny.

The US says the company can spy on customers and has sought to convince allies to exclude it from 5G mobile phone networks. Huawei denies the allegations.

Trump promise

Seeking to lure China back to the negotiating table in late June, Trump promised President Xi Jinping that US companies would be allowed to make some sales to Huawei, a gesture welcomed by US chipmakers and software companies. Huawei spent $11bn on US components from US firms such as Intel Corp, Qualcomm and Micron Technology last year.

Government officials urged US companies to apply for licences following Trump’s pledge of relief, saying exports to Huawei of non-sensitive items that are readily replaced by foreign competitors would be permitted. Ross and Trump in July promised timely responses.

One of the sources noted that the review process was not delayed, pointing to the complexities of interagency consultation.

But the only relief seen by Huawei thus far was the extension in August of the temporary general licence, which gives US companies a small exception to repair and maintain Huawei’s existing handsets and networks.

Derek Scissors a resident scholar of the American Enterprise Institute said a breakthrough in US-China trade talks could spur licence approvals for Huawei as soon as next month.

The two trade teams are due to meet in September in Washington, but no specific dates have been disclosed.

According to three Commerce department officials, many of the licence requests have been reviewed by other agencies such as the Departments of State and Defense.

However, no standards have yet been set and no responses have been issued as officials await a green light from Ross and the White House, according to three people familiar with the process.

The US has a case pending against Huawei over allegations Huawei violated US sanctions on Iran.

Huawei Chief Financial Officer Meng Wanzhou has been detained in Vancouver since December on US bank fraud charges for misleading banks about the company’s Iran business. Trump has at times asserted that Huawei and Meng could be included in a grand US-China trade deal.

Source: Reuters