US President Donald Trump’s administration is considering changing US regulations to allow it to block shipments of chips to Huawei Technologies (華為) from companies such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, two sources familiar with the matter said.
New restrictions on commerce with China’s Huawei are among several options to be considered at high-level US meetings this week and next.
The chip proposal has been drafted, but its approval is far from certain, one of the sources said.
The measure would be a blow to the world’s No. 2 smartphone maker, as well as to TSMC, a major producer of chips for Huawei’s HiSilicon Technologies Co (海思半導體) unit and mobile phone rivals Apple Inc and Qualcomm Inc.
“What they’re trying to do is make sure that no chips go to Huawei that they can possibly control,” the second source said.
The US is trying to convince allies to exclude Huawei components from next-generation 5G networks on grounds its equipment could be used by China for spying.
Huawei has repeatedly denied the claim.
Under the draft proposal, the US government would force foreign companies that use US chipmaking equipment to seek a US license before supplying Huawei — a major expansion of export control authority that could anger US allies worldwide.
The US Department of Commerce declined to comment on the proposal.
However, a spokesman for the department said that US charges against Huawei, including conspiring to steal trade secrets, “reaffirm the need for caution in considering license applications. The US continues to have major concerns about Huawei.”
Huawei did not respond to requests for comment.
A spokeswoman for TSMC said the company does not answer “hypothetical” questions and does not comment on individual customers.
The US placed Huawei on a blacklist in May last year, citing national security concerns.
That forced some US and foreign companies to seek special licenses from the department to sell to it, but China hawks in the US government have been frustrated by the vast number of supply chains beyond their reach.
Others in the Trump administration fear antagonizing Beijing, which last month signed a trade deal with Washington.
They also worry the restrictions would drive innovation offshore and benefit foreign rivals.
Most chipmakers rely on equipment produced by US firms, such as KLA-Tencor Corp, Lam Research Corp and Applied Materials Inc, according to a report last year from China’s Everbright Securities Co (光大證券).
“There is no production line in China that uses only equipment made in China, so it is very difficult to make any chipsets without US equipment,” Everbright wrote.
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