Prevent semiconductor technology from flowing to the military, and 10% of US technology cannot be sold to Huawei! The United States may expand export restrictions on China

Latest update time：2020-04-29

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According to Reuters, the U.S. Department of Commerce proposed to amend the rules for certain exports to China. The new rules require U.S. companies to obtain licenses when selling certain products to military entities, even if these products are for civilian use. In addition, the new rules also cancel the situation that allows certain U.S. technologies to be exported and used to non-military entities without permission.

The report quoted several sources as saying that the US government is tightening rules to prevent China from acquiring advanced US technology through civilian commercial means and then converting it to military use . The relevant rule changes will be published in the Federal Register on Tuesday (28th) US time.

Image source: Phoenix.com

Both military and civilian use are restricted

The semiconductor industry will be affected

In addition to requiring more products to be licensed before export, the U.S. is also extending these restrictions to transactions with Russia and Venezuela . But the biggest impact will be on trade with China.

Russia's Sputnik News Agency reported on the 27th that the Bureau of Industry and Security of the U.S. Department of Commerce has prepared an amendment to the export control regulations for dual-use items and technologies, stipulating that dozens of new products that can be used for military purposes must obtain special licenses from U.S. authorities when exported to Russia, China and Venezuela.

The U.S. Bureau of Industry and Security said the amendment was proposed in accordance with the U.S. national security strategy.

“Obviously, this is intended to give the U.S. government more insight into the types of goods that U.S. exporters are shipping to these countries and their customers,” said Doug Jacobson, a Washington trade lawyer.

The report said that those added to the control list include equipment and materials such as instruments and machinery, communications, software, technology (except space technology required to maintain the operation of the International Space Station), sensors, radars, lasers, and dozens of new products in other fields that can be used for military purposes.

U.S. Commerce Secretary Wilbur Ross once publicly stated: "Some countries have a history of using U.S. company products for military purposes, and doing business with these countries should carefully consider the consequences."

Kevin Wolf, a Washington trade lawyer, commented: " China's change of use of goods is an inevitable result of its military-civilian integration policy - finding military uses for civilian items ." He said the regulatory definition of military use and user is broad.

For example, Wolfe said, if a private Chinese auto company is responsible for servicing military vehicles, then the auto company may now be a military end user, even if the exported items are used in another part of that business, because "military end users are not limited to military organizations. Military end users are still civilian companies, but their operations are designed to support the operation of military programs."

Image source: Phoenix.com

Currently, U.S.-China relations have deteriorated due to technological competition and the COVID-19 pandemic. Some industry insiders believe that the new regulations may have an impact on the sales of U.S. semiconductor industry and civil aviation equipment .

Export restrictions on products containing 10% US technology

Huawei: Mobile phones don’t need to use American components

In May 2019, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce included Huawei and its 68 non-U.S. affiliated companies in the "Entity List." The "Entity List" is a blacklist. Once included in this list, you will lose trade opportunities in the United States and will be subject to technological blockades and international supply chain isolation.

Under current regulations, if the U.S. manufacturing or R&D portion accounts for more than 25% of the total value of the product, an export license is required for foreign sales. This regulation can prevent many "high-tech products containing U.S. technology" from being exported to China from other countries.

The Commerce Department has also drafted a rule that would lower the threshold for exports to Huawei to 10% and expand the scope to include non-tech products such as consumer electronics containing non-sensitive chips , the sources said .

Image source: 21st Century Business Herald

Last year, Huawei purchased $18.7 billion worth of parts in the United States, equivalent to RMB 132.4 billion. In the past, this was only $11 billion, which is a significant increase in its purchases of parts from the United States.

When Huawei P40 was released earlier, Huawei Consumer Business CEO Yu Chengdong said that this phone no longer has any Google products, and Huawei phones do not need to use American components because they have been completely replaced.

Recently, in a recent interview, Huawei founder Ren Zhengfei was asked this question and replied: "Yu Chengdong is not bragging, it is okay not to use American components ."

Image source: Huawei official website

If the chip supply is cut off

Is Huawei ready?

The United States has included Huawei in the Entity List. The biggest impact on Huawei may be the purchase of chips. Huawei is also constantly improving its independent design and production of chips. Currently, Huawei's designed chips are mainly divided into five categories:

1. SoC chip (Kirin series):

Mobile phone SoC chips have always been Huawei's main research focus. In 2019, Huawei launched its first flagship 5G SoC chip, the Kirin 990, which uses a 7nm+ EUV process and integrates a 5G modem into the SoC for the first time, integrating approximately 10.3 billion transistors in a small space4.

2、AI芯片（昇腾系列）：

2018年，在华为HC大会上发布了昇腾910和昇腾310两款AI芯片，分别采用7nm工艺制程和12nm工艺制程，同时采用了“达芬奇架构”。

3. Server chips (Kunpeng series):

Huawei optimized and adjusted the design of the technology licensed by its partner ARM, and released the Kunpeng 920 and the Taishan server and Huawei cloud service based on Kunpeng 920 in January 2019.

4. 5G communication chips (Balong and Tiangang series):

Huawei's 5G chips are mainly divided into terminal chips (Balong series) and base station chips (Tiangang series). The Balong series is a mobile terminal baseband chip and has always been a dedicated chip for Huawei mobile phones.

5. Other special chips:

Including router chips, NB-IoT chips, IPC video codec and image signal processing chips, etc.

Source: Global IoT Observation