Tech Experts Warn Huawei Restrictions Could Negatively Impact U.S. Revenue Stream; Mike Pompeo, Xiaomeng Lu Quoted

Mike Pompeo
Mike Pompeo

Since the Pentagon announced new restrictions on Huawei technology and software to make semiconductors, experts have noted that the blacklist could harm the U.S. revenue stream by limiting the marketplace.  

The U.S. has stated that the change is in preventative measures under the reasoning that Huawei's equipment could be used for Chinese government espionage. Citing national-security concerns, Commerce Department officials put Huawei on an export blacklist.

The proposed rule, which is still under discussion in the Trump administration, would tighten the regulation of shipments to Huawei. The existing rules allow continued shipments to blacklisted companies for products that are made overseas and contain less than 25 percent U.S.-made content. 

Under the new regulations, chip makers using U.S. equipment are now required to have a license before the suppliers ship components to Huawei or any of its subsidiaries. The new rule could disrupt U.S. developers’ ability to obtain vital components for its phones, laptops and smart-devices.

Mike Pompeo, Secretary of State, reported that the restrictions will enhance the integrity of future 5G networks from "untrustworthy" companies, but Xiaomeng Lu, China practice lead at technology consultancy Access Partnership who previously worked at Information Technology Industry Council (ITI), noted that the U.S. restrictions could "shoot American companies in the foot."

Lu stated  on Friday that the restricted regulatory change will cause U.S. chip companies to lose significant sales to the Korean, Taiwanese, Chinese and Japanese competitors. As the revenue stream continues to rise, foreign chipset companies will secure new investments, research and development in the next generation semiconductor technologies without the U.S. as a major competitor. 

"It could harm U.S. companies if they cease to be able to participate effectively and push for their preferred options. It also changes the geopolitical and economic risks faced by Taiwan, a major supplier of chips and electronics for many U.S. firms," Lu added.

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