A new regulation announced last week requires foreign semiconductor suppliers that use U.S. designs to get a license from the U.S. government before selling to Huawei. Business groups aren't exactly welcoming the move with open arms.
Why it matters: The new restrictions may reduce revenues and hobble research and development for U.S. companies.
What they're saying: “It could make it very difficult for U.S. companies who have been selling their products to Chinese companies," said Doug Barry, communications director at the U.S.-China Business Council.
- "That will affect their revenues, their employment, their supply chain [and] the competitiveness of their products."
- A knock-on effect is that research and development, in particular, could take a hit, as companies won't be able to reinvest as much revenue into next-generation products.
Background: The U.S. first placed export limits on Huawei in May 2019. But those guidelines were porous. Huawei could still get U.S. products through third-party vendors. Now that loophole is closed.
What to watch: Other Chinese companies will be affected too, particularly if the Chinese government chooses to retaliate by limiting U.S. access to China's markets.
- "International information and communication technology manufacturers play a vital role in supporting connectivity and economic growth in China and around the world," said Patrick Lozada, director of global policy at the Telecommunications Industry Association.
- "Potential retaliation aimed at international suppliers could undermine business confidence and limit choices for Chinese companies and consumers."
