Huawei will soon face more problems after the US Department of Commerce, enacted new rules that would cut off the Chinese telecom equipment maker from the global chip supply chain on Friday.
“This action puts America first, American companies first, and American national security first,” a senior Commerce Department official told reporters in a telephone briefing on Friday.
The new limitations are effective immediately but the department issued a 120-day grace period.
The new rule seeks to expand the US’s authority over Huawei by blocking the previous loopholes the original ban had. If fully enacted, foreign chipmaking companies that use US technology will have to acquire a US license before they sale semiconductors to Huawei.
The move, according to the firm will “cut off” Huawei’s efforts to skirt US export controls.
“There has been a very highly technical loophole through which Huawei has been in able, in effect, to use U.S. technology with foreign fab producers,” said one executive from the Department of Commerce.
China has also responded to the new measures saying that they are also ready to list US companies in an “unreliable entity list.”
The country is also ready to start investigations and impose restrictions to certain US-based companies like Apple Inc, Cisco Systems Inc and Qualcomm Inc, as well as suspending purchase of Boeing planes.
China’s foreign ministry has urged the US to stop “unreasonable suppression” of Chinese-based companies like Huawei. In response to Reuters, the ministry said it is ready to defend the rights of Chinese based companies.