US export restrictions over chip supplies to Huawei fully in place

Huawei Technologies Co. will be effectively cut off from supplies of semiconductors using U.S. technology as U.S. export restrictions are fully in place on Tuesday, a development also likely to deal a blow to Japanese companies selling parts to the Chinese telecom giant.

The administration of President Donald Trump announced a series of measures in May and August that restricted Huawei from obtaining foreign-made chips developed or produced from U.S. software or technology. An interval that can be seen as a grace period for the measures ended Monday.

Huawei and its affiliates were initially added to the U.S. government's trade blacklist in May last year on the grounds that they are engaging in activities contrary to U.S. national security. The move imposed a license requirement for companies wishing to export certain U.S. items.

But Huawei has continued to use U.S. software and technology to design semiconductors, such as by commissioning the production of its chips in overseas foundries that use U.S. equipment, leading the Commerce Department to take tougher measures on foreign-made chips.

The restrictions introduced in May this year covered semiconductors produced from Huawei's design specifications. In August, they were extended to chips with generic designs.

Semiconductors are used in a wide range of products from smartphones to computers and cars. The technologies are also essential for artificial intelligence and advanced wireless networks such as 5G.

The United States has long been the global semiconductor leader, with its industry having nearly half the global market share in 2019, according to a report by the Semiconductor Industry Association in Washington.

Japanese companies, meanwhile, have supplied parts worth 1.1 trillion yen ($10.4 billion) to Huawei annually. Sony Corp., which has been a supplier of image sensors for smartphone cameras, may be seeking U.S. government approval to export the products, but experts on the issue are skeptical that a license will be granted.

Japan Display Inc., a manufacturer of liquid crystal displays, is expected to explore sales channels other than Huawei, such as Chinese smartphone makers Xiaomi Corp. and Guangdong Oppo Mobile Telecommunications Corp.