Huawei’s export licenses could be revoked by the United States

The new measure would go further by revoking existing licenses. It comes amid heightened US-China tensions sparked by a suspected Chinese spy balloon crossing the United States and intelligence suggesting Beijing is planning to provide lethal aid to Russia for its war in Ukraine.

“The policy that had allowed exports to Huawei, notwithstanding the entity list, is being removed,” said a former senior security official familiar with the administration’s policy deliberations. “The White House is now saying to Commerce, ‘Stop 4G sales, now is the time to do more harm to Huawei, try to end their demise,'” the former official said.

Huawei was placed on the Commerce Department’s so-called Entity List in 2019 by the office that oversees export controls, the Bureau of Industry and Security. The BIS cited potential national security threats when it released the punitive list, which requires exporters to obtain special licenses approving the sale of American technology to the company. US officials say they are concerned that the Chinese government could use Huawei’s telecommunications technology to spy.

Intel declined to comment. Huawei and Qualcomm did not respond to requests for comment. Huawei has said its products do not pose a national security risk.

Alan Estevez, the Commerce Department’s undersecretary of industry and security, told lawmakers on Tuesday that licensing rules established under the Trump administration that allow sub-5G technology to be sold to Huawei were making part of the policies under consideration. He said the Biden administration was also considering additional export controls.

“All of these things are being evaluated,” Estevez told the House Foreign Affairs Committee. “We are doing everything in our power to prevent sensitive American technologies from falling into the hands of malicious actors,” he said, including China’s military, intelligence and security services.

In his prepared testimony, Estevez said his office last year approved about 70% of export control license applications involving China.

A revocation of existing licenses could have a significant impact on US chipmakers, many of which have been given permission to continue selling older generation Huawei phone chips and other processors widely available around the world. Chip companies have argued that restrictions on such products are harmful to US industry because they deprive them of revenue to fund domestic research and development.

Between November 2020 and April 2021, the BIS approved Huawei licenses worth $61.4 billion, according to data released by Representative Michael McCaul (R., Texas) in 2021, suggesting that several billion dollars revenue could be at risk if existing licenses are cancelled. Export licenses typically span multiple years and prescribe a value of products that a company is allowed to ship under them.

Yet some security analysts say older-generation chips still have military uses, including in precision-guided bombs. The flow of semiconductors through China to Russia despite US export controls prohibiting the supply of such products to Russia has highlighted the problem.

Chinese officials have repeatedly criticized the sanctions and said Beijing is not providing material support to Russia for its war in Ukraine.

Amid simmering US-China tensions, policymakers in the administration and on Capitol Hill are scrambling to fill what they say are holes in US trade policy that risk supplying Western technology to enemies such as Iran and Russia and to strategic competitors such as China.

Some industry officials say the administration may see Huawei’s supply ban as leverage in broader negotiations with China, including trade and national security.

But, said Clay Lowery, a former top national security official now at the Institute of International Finance, a consortium of the world’s largest financial institutions, “Influencing China to reduce its economic support for Russia is going to be difficult to sell”.

“That said, Chinese companies have been cautious in their dealings with Russia, as they also want to maintain their relationship with the United States and its Western allies,” added Lowery, who is due to testify before a court hearing on Tuesday. Senate Banking Committee. on export controls.

The Trump administration also considered revoking existing licenses when it decided to put Huawei on its Entity List in 2019, the former official said. He ruled out the action amid concerns raised by the Treasury Department about potential fallout, this person said, including potential retaliation from Beijing and loss of revenue chipmakers need to fund research and development. development.

—Dan Strumpf contributed to this article.

Write to Ian Talley at Ian.Talley@wsj.com and Asa Fitch at asa.fitch@wsj.com