The Trump administration moved to prevent chipmakers using U.S. technology from supplying Huawei Technologies Co., injecting fresh turmoil into the complex international ecosystem that produces computer parts.
The Commerce Department said Friday it would require licenses before allowing U.S. technology to be used by the Chinese tech company or its 114 subsidiaries, including it chip-design unit HiSilicon.
The move is designed to inhibit Huawei from producing and designing its own chips, a senior department official said. U.S. officials accuse Huawei of being a security threat tied to the Beijing government, an allegation the company denies.
"We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests," Commerce Secretary Wilbur Ross said in a tweet.
The new rules require any foreign chipmaker that uses American gear to get a license before they can sell to companies on a U.S. blacklist, a roster that includes Huawei and other prominent Chinese tech giants such as SenseTime Group Ltd. and Megvii Technology Ltd.
The restrictions may constrain the entire contract chipmaking industry because it uses equipment from U.S. vendors Applied Materials Inc., Lam Research Corp. and KLA Corp. in wafer fabrication plants. It steps up an ongoing White House campaign to contain Chinese technology giants viewed as a threat to national security, particularly Huawei — the company at the heart of a global fifth-generation network rollout.
Depositary receipts for Taiwan Semiconductor Manufacturing Co., or TSMC, dropped in New York trading. Hours earlier the company based in Hsinchu, Taiwan said it plans to spend $12 billion building a chip plant in Arizona, a decision designed to allay U.S. national security concerns and shift more high-tech manufacturing to America.
All global chipmakers, including TSMC and China's own SMIC, need gear from U.S.-based companies to fabricate chips for everything from smartphones to supercomputers. But the latest measure affects TSMC disproportionately because it counts on Huawei for about 10% of its revenue, according to Bloomberg's supply chain estimates.
