SHANGHAI – A number of United States' largest chip makers have sold millions of dollars of products to Huawei despite a trump administration ban on the sale of American technology to the Chinese telecommunications giant, according to four people with knowledge of sales
Since the Commerce Department enacted the ban in May, American companies including Intel and Micron have found ways to sell technology to Huawei, said the people who spoke on the condition that they were not named because they were not authorized to disclose the
The components began to flow to Huawei about three weeks ago, the people said. Goods produced by American companies abroad are not always considered American-made, and the suppliers are taking advantage of this. The sales will help Huawei continue to sell products such as smartphones and servers
The Commerce Department's move to block sales to Huawei by putting it on a so-called entity list, set off confusion within the Chinese company and its many American suppliers, the people said. Many executives lacked profound experience with American trade controls, leading to initial suspensions in Huawei shipments until lawyers could puzzle out which products could be sent.
American companies may sell technology supporting current Huawei products until mid-August. But Huawei products are already in place. It's not clear what percentage of current sales were for future products.
While the Trump administration has been aware of the sales, officials are split about how to respond, the people said. Some officials feel that sales violate the spirit of the law and undermine government efforts to pressure Huawei, while others are more supportive because it lightens the blow of the ban for American corporations. Huawei has said that it buys about $ 11 billion in technology from United States companies each year
Intel and Micron have declined to comment
"As we have discussed with the U.S. "John Neuffer, president of the Semiconductor Industry Association, wrote in a statement on Friday
" Every company "
In an earnings call Tuesday afternoon, Micron's chief executive, Sanjay Mehrotra, said the company was shut down shipments to Huawei after the Commerce Department's last month. But it resumed sales about two weeks ago after Micron reviewed the entity's list rules and "determined that we could legally resume" shipping a subset of products, Mr. Mehrotra said. "However, there is considerable ongoing uncertainty around the Huawei situation," he added.
A spokesman for the Commerce Department, in response to questions about Huawei's sales, referred to a section of the official notice about the company being added to the entity list, including that the purpose was to "prevent activities contrary to national security or foreign policy interests of the United States."
The fate of Huawei, a crown jewel of Chinese innovation and technological prowess, has become a symbol of the economic and security standoff between the United States and China. The Trump administration has warned that Chinese companies like Huawei, which makes telecom networking equipment, could intercept or secretly divert information to China. Huawei has denied those charges
President Xi Jinping of China and President Trump are expected to have a "extended" talk this week during the Group of 20 meetings in Japan, signing that the two countries are again seeking a compromise after trade talks broke down in May. After the talks stalled, the Trump administration announced new restrictions on Chinese technology companies
While the Trump administration has pointed to security and legal concerns to justify its actions, some analysts have worried that Huawei and other Chinese tech companies were becoming pawns in the trade negotiations. Along with Huawei, the administration has blocked a Chinese supercomputer maker from buying American tech and is considering adding Hikvision to the list.
Kevin Wolf, a former Commerce Department official and partner at law firm Akin Gump, has advised several American technology companies that supply Huawei. He said he told executives that Huawei's addition to the list did not prevent American suppliers from continuing sales, as long as goods and services were not made in the United States.
A chip, for example, can still be supplied to Huawei if it is manufactured outside of the United States and does not contain any technology that can pose a national security risk. But there are limits on sales from American companies. If the chip maker provides services from United States for troubleshooting or instruction on how to use the product, for example, the company would not be able to sell to Huawei even if the physical chip was made abroad, Mr. Wolf said.
"This is not a loophole or an interpretation because there is no ambiguity," he said. "It's just esoteric."
In some cases, American companies are not the only source of important technology, but they want to avoid losing Huawei's valuable business to a foreign rival. For example, Idaho-based Micron competes with South Korean companies like Samsung and SK Hynix to supply memory chips that go into Huawei's smartphones. If Micron is unable to sell to Huawei, orders could easily be shifted to those rivals.
Beijing has also pressured American companies. This month, the Chinese government said it would create a " unreliable entities list" to punish companies and individuals it perceived as damaging Chinese interests. The following week, China's chief economic planning agency summoned foreign executives, including representatives from Microsoft, Dell and Apple. It warned them that cutting off sales to Chinese companies could lead to punishment and hinted that companies should lobby the United States government to stop the ban. The stakes are high for some of the American companies like Apple, which relies on China for many sales and for much of its production.
Mr. Wolf said several companies had scrambled to figure out how to continue sales to Huawei, with some businesses considering a shift in manufacturing and services of some products abroad. "
" That could mean that American companies shift their know-how, on top of production, outside of the United States, where it would be less easy for the government to control, "said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics
" American companies can move some things out of China if that's problematic for their supply chain, can also move the tech development out of the US if that becomes problematic, "he said. "And China remains a big market."
"Some of the big winners might be other countries," Mr.
On Monday, FedEx filed a lawsuit against the federal government, claiming that the Commerce Department's rules placed an "impossible burden" on a company like FedEx to know the origin and technological makeup of all the shipments it handles
FedEx's complaint did not name Huawei specifically. "FedEx is a transport company, not a law," said FedEx, a law firm, "
A Commerce Department spokesman said the FedEx's complaint, but would defend the agency's role in protecting national security.