US companies explore the regulatory gap of the "Huawei ban" and the window for resumption of supply may be closed at any time

Recently, many US media and technology companies have confirmed that they have resumed product supply to Huawei. Intel and Qualcomm have resumed supplying some goods to Huawei. Micron Technology CEO publicly stated at the earnings analysis meeting that they began to resume supplying some semiconductors to Huawei two weeks ago. Of course, there are more technology companies studying ways to resume supply to Huawei.

Influenced by this news, on June 26, the share prices of Intel and Qualcomm rose by 3%, and the share price of Micron Technology soared by 13.34%. In addition, Nvidia rose by 5% and AMD rose by 4%. However, both Huawei and the US companies that resumed transactions with it are still holding their breath. The temporary restoration of some supply channels is just an exploration of export guidance opinions by US technology companies based on the Bureau of Industry and Security (BIS), and this exploration may be rejected by BIS at any time.

According to analysis by several domestic and foreign law firms, the products that the United States has resumed supplying to Huawei are all "non-US-made". According to §734.4 of the Export Control Regulations and the second supplementary clause, there are four types of control thresholds for the export of non-US-made products or technologies.

Most of the products of American technology companies are not made in the United States. According to the ECCN code of the commodity control list, the first category of products includes memories and FPGAs with codes such as "3A001" and "4A003", as well as "600 series" coded products included in the Munitions List (USML) and the Wassenaar Agreement. These products are "unconditionally" subject to the jurisdiction of the US Export Control Regulations. The second category is non-military products exported to the four "E:1" controlled countries of North Korea, Iran, Syria, and Sudan. As long as the value of the US technology involved exceeds 10%, it is subject to the Export Control Regulations. The third category is non-military products exported to non-"E:1" level, controlled countries, and the value of the US technology involved exceeds 25%, which is subject to the Export Control Regulations. The fourth category is non-US-made products that are not subject to the Export Control Regulations.

It is worth mentioning that if the "value of U.S. technology" is difficult to measure, BIS allows companies to calculate the value of U.S. technology according to their own calculation method. According to the third category, if the value of U.S. technology in this product is equal to or less than 25%, then these goods may not be subject to the Export Control Regulations and supply to Huawei can be resumed.

However, US companies need to report in detail to BIS, describe US and non-US technologies, and elaborate on the calculation method of "value share". If BIS does not respond to this report within 30 days, then US companies can supply according to this declaration. Based on the above conditions, TSMC may have declared to the US BIS very early to confirm that the value of the US technology it uses is less than 25%, which is why TSMC can continue to supply Huawei. American technology companies have basically waited for nearly a month in the declaration process, and the earliest company to resume partial supply only resumed supply two weeks ago.

No American chip company is willing to bear the consequences of losing Huawei, and Chinese and American technology companies are looking for channels for cooperation in this tight blockade. Unfortunately, BIS may reject the calculation methods reported by these American technology companies at any time, or modify §734.4 and the second supplementary clause. By then, the "crack channel" that has not yet been popularized will also be forced to close. There is still a lot of uncertainty surrounding the trade blockade of Huawei, and no company can predict how long it will be able to supply Huawei.