Commerce Addresses Huawei’s Efforts to Undermine Entity List, Restricts Products Designed and Produced with U.S. Technologies

The Bureau of Industry and Security (BIS) today announced plans to protect U.S. national security by restricting Huawei’s ability to use U.S. technology and software to design and manufacture its semiconductors abroad. This announcement cuts off Huawei’s efforts to undermine U.S. export controls. BIS is amending its longstanding foreign-produced direct product rule and the Entity List to narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology. 

Since 2019 when BIS added Huawei Technologies and 114 of its overseas-related affiliates to the Entity List, companies wishing to export U.S. items were required to obtain a license.[1]  However, Huawei has continued to use U.S. software and technology to design semiconductors, undermining the national security and foreign policy purposes of the Entity List by commissioning their production in overseas foundries using U.S. equipment.

“Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort.  However, that effort is still dependent on U.S. technologies,” said Secretary of Commerce Wilbur Ross.  “This is not how a responsible global corporate citizen behaves.  We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests.”

Specifically, this targeted rule change will make the following foreign-produced items subject to the Export Administration Regulations (EAR): 

(i)        Items, such as semiconductor designs, when produced by Huawei and its affiliates on the Entity List (e.g., HiSilicon), that are the direct product of certain U.S. Commerce Control List (CCL) software and technology; and

(ii)       Items, such as chipsets, when produced from the design specifications of Huawei or an affiliate on the Entity List (e.g., HiSilicon), that are the direct product of certain CCL semiconductor manufacturing equipment located outside the United States.  Such foreign-produced items will only require a license when there is knowledge that they are destined for reexport, export from abroad, or transfer (in-country) to Huawei or any of its affiliates on the Entity List.

To prevent immediate adverse economic impacts on foreign foundries utilizing U.S. semiconductor manufacturing equipment that have initiated any production step for items based on Huawei design specifications as of May 15, 2020, such foreign-produced items are not subject to these new licensing requirements so long as they are reexported, exported from abroad, or transferred (in-country) by 120 days from the effective date.

Federal Register notice of the interim final rule is available here.


[1] In May 2019, BIS added Huawei Technologies Co., Ltd. (Huawei) and certain non-U.S. affiliates to the Entity List (with additional affiliates added in August 2019) on the basis of information that provided a reasonable basis to conclude that Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interests.  This information included the activities alleged in the Department of Justice’s public Superseding Indictment of Huawei, including alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions.

BIS Huawei美国工业和安全局商务部彻底封杀华为禁令新规全文内容中文
(i) 由华为及其附属公司在实体清单(如HiSilicon)上生产的半导体设计等项目,是某些美国商业控制清单(CCL)软件和技术的直接产品;以及
[1] 2019年5月,国际清算银行将华为技术有限公司(Huawei Technologies Co.,Ltd.)和某些非美国分支机构列入实体名单(2019年8月增加了其他分支机构),其依据是提供了合理的依据,可以断定华为从事的活动违反美国国家安全或外交政策利益。这些信息包括司法部公开撤销对华为的起诉所指控的活动,包括涉嫌违反《国际紧急经济权力法》(IEEPA),串谋通过向伊朗提供被禁止的金融服务来违反IEEPA,以及在调查涉嫌违反美国制裁的案件时妨碍司法公正。


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