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U.S. Lawmaker Calls for End to Technology Exports to Huawei and SMIC Amid Chip Violation Concerns

U.S. Lawmaker Calls for End to Technology Exports to Huawei and SMIC Amid Chip Violation Concerns

Representative Mike Gallagher urges the U.S. Commerce Department to halt all technology exports to Chinese tech giants Huawei and SMIC following the discovery of potentially trade-restrictive chips in Huawei phones.

Introduction: In a bid to address national security concerns, Representative Mike Gallagher, the chair of the House of Representatives' committee on China, has called on the U.S. Commerce Department to cease all technology exports to Huawei and Semiconductor International Manufacturing Corp (SMIC). This comes after the recent release of Huawei's Mate 60 Pro smartphone, which contains a chip that analysts suspect may have been manufactured using a breakthrough technology developed by SMIC. Gallagher argues that the chip's production likely relied on U.S. technology, potentially violating the Department of Commerce's Foreign Direct Product Rule. The congressman's statement underscores the need to cut off any firm that flouts U.S. law and jeopardizes national security.

The Huawei-SMIC Connection and Trade Restrictions

Huawei, a Chinese electronics giant, has been on a trade blacklist since May 2019 due to concerns over national security. This listing has required Huawei's U.S. suppliers and others to obtain special licenses to continue shipping goods to the company. Similarly, SMIC, China's leading semiconductor firm, was added to the entity list in December 2020 amid fears that it could divert advanced technology for military purposes. The trade restrictions imposed on Huawei and SMIC include the Foreign Direct Product Rule, which aims to prevent any company worldwide from using tools from the United States to manufacture chips for Huawei. However, despite their inclusion on the trade lists, suppliers to both companies have reportedly been granted billions of dollars' worth of licenses to sell U.S. technology. Notably, approximately 90% of these licenses were for sales to SMIC, according to previous reports by Reuters.

The Implications of the Alleged Chip Violation

Representative Gallagher's call to end technology exports to Huawei and SMIC is rooted in concerns over potential violations of trade restrictions. The discovery of a chip in the Huawei Mate 60 Pro, believed to be manufactured using SMIC's breakthrough technology, raises questions about the use of U.S. technology in the production process. If confirmed, this would constitute a violation of the Foreign Direct Product Rule. The alleged violation highlights the need for stricter enforcement of trade restrictions and the potential risks associated with the misuse of U.S. technology. By cutting off technology exports to Huawei and SMIC, Gallagher aims to send a clear message that any firm undermining U.S. law and national security will face severe consequences.

The Role of the U.S. Commerce Department

As Representative Gallagher urges the U.S. Commerce Department to take action, it remains to be seen how the department will respond. The bureau overseeing export controls, responsible for enforcing trade restrictions, has not yet commented on the matter. The department's decision will have significant implications for the future of technology exports to Huawei and SMIC, as well as for the broader U.S.-China trade relationship. Conclusion: Representative Mike Gallagher's call to halt technology exports to Huawei and SMIC reflects growing concerns over potential violations of trade restrictions and national security risks. The alleged discovery of a chip in Huawei's Mate 60 Pro, suspected to have been manufactured using SMIC's breakthrough technology, underscores the need for stricter enforcement of trade rules. By cutting off technology exports, Gallagher aims to send a strong message that firms flouting U.S. law and undermining national security will face severe consequences. The response of the U.S. Commerce Department to these concerns will shape the future of technology exports to Chinese tech giants and have far-reaching implications for the U.S.-China trade relationship.