Monday, December 6, 2021

Huawei, SMIC suppliers received billions worth of licences for US goods, documents show

Export licences worth US$61 billion were approved for suppliers to ship products to Huawei while licenses valued at nearly US$42 billion were greenlighted for Semiconductor Manufacturing International Corp.

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Suppliers to Chinese telecoms giant Huawei and China’s top chipmaker SMIC got billions of dollars worth of licences from November through April to sell them goods and technology despite their being on a US trade blacklist, documents seen by Reuters showed on Thursday.

According to the documents, 113 export licences worth US$61 billion were approved for suppliers to ship products to Huawei while another 188 licences valued at nearly US$42 billion were greenlighted for Semiconductor Manufacturing International Corp (SMIC).

The data also showed that more than nine out of 10 licence applications were granted to SMIC suppliers while 69% of requests to ship to Huawei were approved over the same period.

The US House of Representatives Foreign Affairs committee on Thursday voted to grant a request by its top Republican member Michael McCaul to release the licensing data, which it received from the Commerce Department in May.

House Republicans on the committee provided the documents to Reuters following the authorisation, at Reuters request. The documents are expected to be posted publicly soon.

The numbers could enrage China hawks in Washington, who have made a concerted effort to deprive Chinese companies of access to advanced US technology.

“It’s clearly in our national interest to increase transparency and public scrutiny on how our nation transfers its technology to an adversary,” McCaul said in a statement.

Republican senator Marco Rubio told Reuters he thinks President Joe Biden needs to explain why the companies have continued to receive “waivers.”

“It is just another example of President Biden not taking the economic and security threat posed by the Chinese Communist Party seriously,” he said.

The Commerce Department said in a statement that the release of an arbitrary snapshot of license approvals “risks politicising the licensing process and misrepresenting the national security determinations” made by the government.

It also stressed that approved licence applications do not represent actual shipments and around half of all licences are used. It added that licence applications involving Huawei and SMIC are processed under policies developed by the Trump administration and maintained by the Biden administration.

Huawei declined to comment, while SMIC did not respond to a request for comment.

Huawei was placed on a trade blacklist in May 2019 over national security concerns, forcing its US suppliers and others to obtain a special licence to ship goods to it. SMIC was added to the so-called entity list in December 2020, over fears it could divert advanced technology to military users.

A majority of the licences granted did not authorise shipments of sensitive items. Of the 113 licences approved for Huawei during the period, 80 were for non-sensitive items that only required a licence because the recipient was blacklisted. For SMIC, the figure was 121 of 188.

Licences are generally good for four years.

Reuters reported earlier this year that, during the Trump administration, US$87 billion worth of licences for Huawei were approved after it was blacklisted.

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