Description
The Trump administration has implemented a series of export controls targeting Chinese telecommunications giant Huawei. The measures, designed to protect US national security interests, attempt to cut off Huawei’s access to semiconductors, the tiny chips necessary to produce the company’s telecommunications hardware for 5G networks.
Global semiconductor supply chains are long, but four important parts stand out—semiconductor manufacturing equipment, software, the design process, and manufacturing the chips. Often, these parts are all done by different companies in different countries.
In 2019, the US Department of Commerce added Huawei to its “Entity List,” prohibiting American firms from selling goods and services to Huawei and its subsidiary, HiSilicon, without a license. But the restrictions failed to disrupt Huawei’s access to semiconductor supplies as the chips were still available from manufacturers outside the United States.
To prevent Huawei from circumnavigating the 2019 export restrictions, the Trump administration implemented new curbs in 2020 that prevented American manufacturers of equipment used to produce semiconductors from selling to companies abroad that wanted to sell chips to Huawei. Foreign-located firms were presented with a choice: continue to do business with Huawei and lose access to American-made tools or stop selling to Huawei and continue to buy American equipment.
This PIIE Chart was adapted from Chad P. Bown’s blog post, “How Trump’s export curbs on semiconductors and equipment hurt the US technology sector.”
