Looking to maintain global tech leadership, U.S. could reduce restrictions on Huawei

Since the National Football League (NFL) regular season kicked off this week, we can use a football analogy for this story. Let's say that a football team-let's call them Huawei-was about to win the Super Bowl scoring a touchdown on the last play of the game. But just as Huawei was celebrating, Red, White, and Blue penalty flags were tossed on the field by the officials negating the touchdown and forcing Huawei to lose the game.

What we are trying to say is that Huawei was on the way to becoming the largest smartphone manufacturer in the world, a goal it set out to accomplish over a five-year period. But just before Huawei could surpass Samsung and Apple at the top, the U.S. stepped in and placed Huawei on the Entity List. This prevents the company from accessing its U.S. supply chain including Google Mobile Services (GMS).

Exactly one year later to the day, the U.S. Commerce Department changed U.S. export rules that prevents foundries using U.S. technology from shipping cutting-edge chips to Huawei. As a result Huawei's latest two flagship series (last year's photographic-focused P50 line and the recently unveiled Mate 50 line) use 4G-only versions of the top-of-the-line Qualcomm Snapdragon chipsets.

Some inside Huawei were hoping that when Joe Biden won the 2020 election, the new administration would rescind the restrictions against Huawei. This has not been the case up until now. But there is change on the way. Bloomberg reported the other day that the U.S. Commerce Department’s Bureau of Industry and Security issued a rule allowing certain low-level technologies to be shared when standards are being deliberated with organizations that include sanctioned firms like Huawei.

After Huawei was placed on the Entity List in 2019, U.S. tech firms limited their participation in standards-related activities. In Washington, politicians did like the idea of China increasing its participation in these organizations that determine how technology is applied and used worldwide. This gives China, considered a national security threat, an advantage over U.S. firms.

Alan Estevez, the Commerce undersecretary for industry and security, said, "U.S. stakeholders need to be fully engaged in international standards organizations, particularly where the critical but sometimes invisible standards that they set have important national security as well as commercial implications." But to prevent these American firms from having to apply for a license every time that they are part of an organization setting global tech standards, the Commerce Department is relaxing the restrictions about sharing tech with blacklisted firms like Huawei.

The U.S. doesn't want to lose its leadership role in technology and one way to make sure that this doesn't happen is to allow restricted firms to have access to needed American technology. The Commerce Department has yet to release a list of the technologies that it will allow companies like Huawei to share.

Estevez adds that the new rule will allow for "US leadership in these critical bodies." For companies like Huawei, this is a small loosening of the restrictions it finds itself under. If there is a positive to come out of this for the Chinese manufacturer, it's that the company learned that it has the abilities to work around U.S. restrictions. Without the ability to use the GMS version of Android, Huawei developed its own HarmonyOS, which is now in its third generation.

The company was also forced to develop Huawei Mobile Services (HMS) which is now used by over 700 million users. The move announced by the Commerce Department is not going to immediately improve Huawei's chances of moving back up the charts. But what it might do is make administration officials more likely to come up with a solution that will appease all interested parties.