The Chinese trade press was abuzz with the notion that the US Department of Commerce, under the Trump administrations last two working days, would revoke at least one previously issued license concerning product sales to Huawei (pvt), and would reject a large number of license applications. This was based on a (unconfirmed) e-mail from the US Semiconductor Industry Association and a Reuters clip that stated that the Trump administration had notified Huawei suppliers, including Intel (INTC), that it is revoking certain licenses and intends to reject dozens of other applications.
Currently there are approximately 150 applications for licenses to provide product to Huawei from US companies, with an estimated value of $120b US, waiting for decisions, some of which have been in the hopper for months. As President Trump has been the instigator of the Huawei ban, which was initially put in place in May of 2019, the final decision on the licenses remains in his hands for the next two days. If he rejects a large number of those applications en masse, we would expect companies to refile within a short time, hoping that the Biden administration has a less stringent policy toward Huawei.
While we do not expect the Biden administration to lift those bans placed by the previous administration, we expect a re-evaluation as to the impact of the more recent regulations that ban any company from supplying Huawei if they use any US made equipment in the design or manufacturing of their product, which has a significant effect on not only US companies, but many foreign companies, particularly in the semiconductor space that use US chip design software. Unfortunately, we also expect that this will not be a high priority for the Biden administration, given the COVID-19 crisis, but the timeline associated with the potential denials require companies to respond within 20 days, followed by a 45 day period when the Commerce Department would advise the companies of any changes, followed by a 45 day appeal window. That’s 110 days total, with the new Commerce Department having to respond by the first week in February.
Currently there are approximately 150 applications for licenses to provide product to Huawei from US companies, with an estimated value of $120b US, waiting for decisions, some of which have been in the hopper for months. As President Trump has been the instigator of the Huawei ban, which was initially put in place in May of 2019, the final decision on the licenses remains in his hands for the next two days. If he rejects a large number of those applications en masse, we would expect companies to refile within a short time, hoping that the Biden administration has a less stringent policy toward Huawei.
While we do not expect the Biden administration to lift those bans placed by the previous administration, we expect a re-evaluation as to the impact of the more recent regulations that ban any company from supplying Huawei if they use any US made equipment in the design or manufacturing of their product, which has a significant effect on not only US companies, but many foreign companies, particularly in the semiconductor space that use US chip design software. Unfortunately, we also expect that this will not be a high priority for the Biden administration, given the COVID-19 crisis, but the timeline associated with the potential denials require companies to respond within 20 days, followed by a 45 day period when the Commerce Department would advise the companies of any changes, followed by a 45 day appeal window. That’s 110 days total, with the new Commerce Department having to respond by the first week in February.
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