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U.S. Considering Restrictions to Curb Chinese Access to Chip Tech

A chip by Huawei’s subsidiary HiSilicon is displayed at the Huawei China Eco-Partner Conference in Fuzhou, Fujian province, China, March 21, 2019. (Stringer/Reuters )

The Trump administration is considering slapping China with new trade restrictions that would curb the country’s access to American chip technology in a move targeting Huawei Technologies Co., China’s largest smartphone maker.

The Commerce Department is proposing tightening what is known as the foreign direct product rule, which limits the ability of foreign countries to use American technology for military or national-security purposes. The new rules would require factories across the globe to obtain licenses in order to make chips for Huawei using American equipment, the Wall Street Journal reported.

The new restrictions are intended to restrict the world’s second-largest economy’s imports of U.S. semiconductor technology, one of China’s largest American imports. An additional new rule would curb the ability of American companies to supply equipment to Huawei from their overseas facilities. Critics worry the rules could also harm the growth of U.S. companies who supply to Huawei.

Last week, U.S. officials warned that Huawei, which is closely tied to the Chinese Communist Party, has for over a decade been able to use a backdoor method intended only for law enforcement to gain access to U.S. cellular networks and private information without the knowledge of the networks.

In November, the Federal Communications Commission blocked Huawei from accessing billions of dollars in federal-broadband subsidies over concerns that Huawei could use its inroads into American broadband infrastructure to spy on the U.S. and steal sensitive data.

President Trump, who has said he wants U.S. companies to do business with Huawei as long as the equipment does not compromise national security, has reportedly not reviewed the new restrictions proposed by the Commerce Department.

The U.S. signed a “phase-one” trade deal with China last month, in which China agreed to buy about $200 billion worth of U.S. goods over two years and the parties agreed to a new intellectual-property regime, a contentious point in the trade negotiations between the two countries.

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