On Monday, the US Commerce Department announced that it would relax some of the restrictions the United States imposed on the Chinese company last week. The restrictions have made it difficult for American companies to do business with Huawei.
The VanEck Vectors/Semiconductor ETF (SMH), which was down considerably on the news last week, has rebounded and is up nearly 2.5% in trading today.
In a radical move last Wednesday, President Donald Trump delivered an executive order banning U.S. businesses from using information and communications technology from anyone deemed to be a national security threat and declared a national emergency on the matter. Many believed at the time that the decision was targeting Chinese telecom behemoth Huawei.
The department issued a temporary general license that permits Huawei to buy US goods so that it can maintain existing networks and continue providing wireless services. The company is still banned from buying US equipment to make new products however.
“The Temporary General License grants operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” Secretary of Commerce Wilbur Ross said in a statement.
“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.
The U.S. has been concerned, among other things, that spying relating to Huawei had been taking place.
“We’re deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks that provides the capacity to exert pressure or control over our telecommunications infrastructure,” FBI Director Christopher Wray said in his testimony. “It provides the capacity to maliciously modify or steal information, and it provides the capacity to conduct undetected espionage.”
Huawei founder Ren Zhengfei said today that the US temporary license didn’t “make much sense,” once again affirming that the company was prepared for disruptions to its supply chain.
“We shall not narrow-mindedly exclude US chips. We shall grow together. But when there is a supply shortage, we have a backup,” he said in an interview with Chinese state broadcaster CCTV.
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