U.S Companies may Receive Licenses for Sales to Huawei | Financial Buzz

U.S Companies may Receive Licenses for Sales to Huawei

The U.S Department of Commerce will permit certain U.S. companies to conduct business with Huawei as long as there is no threat to the national security of the U.S.

The news follows the outcome of the G20 summit meeting between President Donald Trump and the President of China, Xi Jinping. On June 29th, President Trump tweeted that “At the request of our High Tech companies, and President Xi, I agreed to allow Chinese company Huawei to buy product from them which will not impact our National Security.”

In addition, Trump had agreed to neither increase nor decrease the tariffs currently imposed on China but has said “negotiations again with China as our relationship with them continues to be a very good one.”

Huawei and its 70 subsidiaries and affiliates were added onto the BIS Entity List in May which forbade U.S. companies from doing business with it. Many tech companies such as Google (NASDAQ: GOOGL), Intel (NASDAQ: INTC), and Broadcom (NASDAQ: AVGO) had been forced to sever their ties with Huawei in wake of the ban.

At an annual department conference in Washington, Commerce Secretary Wilbur Ross said that Huawei and its associated companies will remain on the list leading to licenses being denied, but also offered openings for licenses to be approved.

Although companies may be approved to sell to Huawei with licenses, many U.S. Companies have found legal ways to bypass the Huawei blacklist already. The largest U.S. maker of computer memory chips, Micron Technology Inc. (NASDAQ: MU), has begun selling products to Huawei taking advantage of certain exceptions of the restriction.

Through ownership of operations and subsidiaries overseas, companies can classify their technology as foreign and if less than 25% of the component in the product originates in the U.S. it isn’t covered by the ban. 

As trade talks have been resumed between the U.S. and China, Huawei will definitely be a prioritized topic between the two countries.

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