U.S. Commerce further restricts Huawei access to U.S. tech and adds 38 affiliates to the entity list

The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) further restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software. In addition, BIS added another 38 Huawei affiliates to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR) and modified four existing Huawei Entity List entries. BIS also imposed license requirements on any transaction involving items subject to Commerce export control jurisdiction where a party on the Entity List is involved, such as when Huawei (or other Entity List entities) acts as a purchaser, intermediate, or end user. These actions, effective immediately, prevent Huawei’s attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology.  

In May 2020, BIS amended the longstanding foreign-produced direct product (FDP) rule to target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology. Today’s amendment further refines the FDP rule by applying the control to transactions: 1) where U.S. software or technology is the basis for a foreign-produced item that will be incorporated into, or will be used in the “production” or “development” of any “part,” “component,” or “equipment” produced, purchased, or ordered by any Huawei entity on the Entity List; or 2) when any Huawei entity on the Entity List is a party to such a transaction, such as a “purchaser,” “intermediate consignee,” “ultimate consignee,” or “end-user.”

This amendment further restricts Huawei from obtaining foreign made chips developed or produced from U.S. software or technology to the same degree as comparable U.S. chips.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” said Commerce Secretary Wilbur Ross. “As we have restricted its access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

The following 38 new Huawei affiliates across 21 countries were added to the Entity List because they present a significant risk of acting on Huawei’s behalf contrary to the national security or foreign policy interests of the United States. There is reasonable cause to believe that Huawei otherwise would seek to use them to evade the restrictions imposed by the Entity List.

Huawei Cloud Computing Technology; Huawei Cloud Beijing; Huawei Cloud Dalian; Huawei Cloud Guangzhou; Huawei Cloud Guiyang; Huawei Cloud Hong Kong; Huawei Cloud Shanghai; Huawei Cloud Shenzhen; Huawei OpenLab Suzhou; Wulanchabu Huawei Cloud Computing Technology; Huawei Cloud Argentina; Huawei Cloud Brazil; Huawei Cloud Chile; Huawei OpenLab Cairo; Huawei Cloud France; Huawei OpenLab Paris; Huawei Cloud Berlin; Huawei OpenLab Munich; Huawei Technologies Dusseldorf GmbH; Huawei OpenLab Delhi; Toga Networks; Huawei Cloud Mexico; Huawei OpenLab Mexico City; Huawei Technologies Morocco; Huawei Cloud Netherlands; Huawei Cloud Peru; Huawei Cloud Russia; Huawei OpenLab Moscow; Huawei Cloud Singapore; Huawei OpenLab Singapore; Huawei Cloud South Africa; Huawei OpenLab Johannesburg; Huawei Cloud Switzerland; Huawei Cloud Thailand; Huawei OpenLab Bangkok; Huawei OpenLab Istanbul; Huawei OpenLab Dubai; and Huawei Technologies R&D UK

The Temporary General License (TGL) has now expired. This rule further protects U.S. national security and foreign policy interests by making a limited permanent authorization for the Huawei entities on the Entity List. This limited authorization is for the sole purpose of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently “fully operational networks” and equipment.

In a concurrent rule, BIS revised the Entity List to require a license when a party on the Entity List acts as a purchaser, intermediate consignee, ultimate consignee, or end user to an EAR transaction. This aligns with the additional restrictions imposed in the revisions to the FDP, when any of the Huawei entities on the Entity List are a party to the transaction, such as by acting as purchaser, intermediate consignee, ultimate consignee, or end user.