by 
The U.S. Department of Commerce has again extended the temporary general license (TGL) allowing U.S. tech companies – such as Intel, Micron, Qualcomm and Xilinx -- to sell components to Chinese networking giant Huawei Technologies.
This is the third such extension since the U.S. government, citing security concerns, added Huawei to its “Entity List" in May. The existing license was set to expire Monday.
"The Department will continue to rigorously monitor sensitive technology exports to ensure that our innovations are not harnessed by those who would threaten our national security," Commerce Secretary Wilbur Ross said in a statement.
The Commerce Department also said the reprieve will help help rural U.S. wireless providers that use Huawei's inexpensive equipment in their networks.
But the move may too little, too late, for U.S. companies that supply components used in Huawei’s 5G telecommunications systems. In September, Huawei announced production of 5G base stations that did not include certain American chips. At that time, Huawei was close to exhausting its stockpile of key U.S. semiconductors, including Xilinx Inc. FPGAs.
"I predict that Huawei will use up Xilinx FPGA chips in November,” Joe Madden, chief analyst of California-based research firm Mobile Experts, told The Washington Post. Xilinx’s FPGA technology allows the reprogramming of 5G base stations by changing the code, even if the base station is already installed in a tower. Telecom companies value that flexibility with 5G because the technology is new and will probably require frequent adjustments over time.
Huawei is the world’s third-largest consumer of semiconductors, according to Gartner. In 2018, Huawei bought $70 billion worth of components; roughly $11 billion went to U.S. firms.
The U.S. prohibition on Huawei also discourages American companies from buying Huawei products. The Trump administration says Huawei's networking equipment carries risks to U.S. national security because its telecommunications gear could be used for spying by Beijing. The U.S. government has also accused Huawei of skirting sanctions and stealing intellectual property from American companies, all claims that Huawei staunchly denies.
But the boycott is hindering small U.S. telecom companies, according to one industry expert. Rural telecommunications providers across the United States are highly reliant on Huawei equipment and software to provide fiber and broadband access to many small communities.
The Commerce Department’s rationale for the latest TGL extension was essentially the same as in May, according to Nelson Dong, senior partner at international law firm Dorsey & Whitney and head of its national security group. “If the Entity List prohibition were carried out fully and immediately, many of those rural carriers would be effectively shut down or, in the words of Secretary of Commerce Wilbur Ross, would ‘otherwise be left in the dark,’” Dong said in a statement.
“The compromise position implicit in the TGL’s extension shows the practical difficulties in seeking to exclude Huawei and its business units from the U.S. telecommunications market when many such rural telecommunications providers find Huawei’s equipment and software particularly attractive because they are generally robust, reliable and relatively inexpensive compared to other market options,” Dong continued.
The Huawei ban limits choice for these companies, Dong said.
“The U.S. traditionally opposes the imposition of non-market, government-imposed factors on private companies, and yet the Entity List designation is plainly causing a non-market, government-imposed choice upon many American telecommunications providers across rural America,” he said. “If forced to dump their investments in Huawei equipment and software, it is foreseeable many of these providers would become financially strained and stressed because they could then only choose much more costly alternative vendors.”
Absent more federal dollars being found to underwrite such added costs, it would be hard to avoid the “going dark” scenario acknowledged by Secretary Ross, Dong says.
U.S. chip makers have already adjusted their expectations for post-Huawei market. Xilinx, which shipped $50 million worth of product to Huawei in its first fiscal (June) quarter, has eliminated Huawei from its future forecasts.
“Considering the continued trade restrictions with Huawei and the uncertainty presented to our business, we believe it is prudent to remove all remaining revenue expectations related to Huawei from our fiscal 2020 outlook,” CEO Victor Peng told analysts in late October.
Huawei said it can survive without supply from the United States. Huawei is already producing 5G base stations that do not contain U.S. devices, said founder Ren Zhengfei at a business forum in late September. Huawei was scheduled to start mass production of those base stations in October and plans to more than double its output by 2020.
