Last week, the U.S. Department of Commerce announced it would allow American businesses to do business with controversial Chinese conglomerate Huawei (with certain restrictions). Washington made the move after President Trump and Chinese President Xi Jinping had a meeting at the last G20 summit.
On Monday, the Commander-in-Chief met with the heads of seven technology corporations and told them “timely licensing decisions” would be forthcoming.
U.S. Semiconductor Industry Advocates for Huawei
According to Bloomberg, the CEOs of Alphabet, Broadcom, Cisco Systems, Intel, Micron, Qualcomm, and Western Digital came to the White House to discuss the U.S.-China trade war. During the meeting, the tech industry leaders wisely praised the President’s trade policies. But the group also asked that the Commerce Department begin issuing Huawei trade approvals in a “timely” fashion and Trump agreed to the request.
In particular, the chipmakers in attendance argued that doing business with Huawei was critical to the success of U.S. semiconductor companies. Indeed, before the blacklist went into effect, the Sino tech conglomerate was responsible for 13 percent of Micron’s income.
Bloomberg noted that if Washington eases restrictions on Huawei, China is prepared to respond in kind. The publication also noted that Chinese agricultural importers have recently talked to U.S. exporters about their pricing. Sino government representatives have even reportedly discussed waving import taxes on American soybeans with local purchasers.
However, a leading U.S. newspaper uncovered information about Huawei’s past that may threaten its future.
Huawei’s Secret North Korean 3G Project
On Monday, the Washington Post published a story indicating Huawei covertly helped set up North Korea’s 3G infrastructure.
The publication reports the country sought to establish a modern telecommunications network in the mid-2000s. Then leader Kim Jong-Il contracted Huawei, Egyptian firm Orascom Telecom Holding, and a state-controlled company called Korean Post and Telecommunications Corporation to create a national wireless carrier called Koryolink.
Orascom and Korean Post purchased acquire antennas, base stations, software, and other crucial telecom equipment for Koryolink from Huawei. Additionally, the corporation developed protocols allowing the local government to conduct encrypted communications within the commercial network. The Sino-American electronics company transported equipment to North Korea via a Chinese conglomerate called Panda Group.
Huawei also set up an office in Pyongyang to service the network, which went live in 2008. However, the firm shuttered its North Korean location in 2016 after the United Nations and the U.S. issued more sanctions against the Communist nation.
The Washington Post spoke to several experts who believe Huawei constructed Koryolink with material that contained at least 10 percent U.S. originating content. As the firm had no license to do so, it likely violated U.S. sanctions to bring 3G to North Korea.
The newspaper contacted Huawei regarding its findings, and the company denied the firm had a “business presence” in North Korea. The U.S. Department of Commerce has had an open investigation in dealings between the corporation and the Asian superpower since 2016. Moreover, the Justice Department has charged the conglomerate with violating U.S. trade sanctions against Iran.
In fact, Huawei CFO Meng Wanzhou is currently in Canada awaiting extradition to the United States to face charges of facilitating business deals between her company and Iran
An unnamed State Department official told the Post its story confirmed suspicions that the Sino telecom is “untrustworthy.” Along similar lines, U.S. Senators Tom Cotton (R-Ark.) and Chris Van Hollen (R-Md.) recently called the corporation a “malign actor.”
As such, even with domestic support, Hauwei’s re-entrance into the American semiconductor market may not be a foregone conclusion. If U.S. investigators verify the Washington Post’s findings, it would be difficult for the Trump administration to authorize trade with the Sino telecom.