US weighs sanctioning Huawei’s secretive Chinese chip network

The Biden administration is considering blacklisting a number of Chinese semiconductor firms linked to Huawei Technologies Co. after the telecom giant notched a significant technological breakthrough last year, people familiar with the matter said, Report informs via Bloomberg.

Such a move would mark another escalation in a US campaign to ringfence and curtail Beijing’s AI and semiconductor ambitions. It would ratchet up the pressure on a Chinese national champion that’s made advances despite existing sanctions, including producing a smartphone processor last year that many in Washington thought beyond its capabilities.

Most of the Chinese entities that could be affected were previously identified as chipmaking facilities acquired or being built by Huawei in a presentation by the Washington-based trade group Semiconductor Industry Association, according to people familiar with the matter. No final decisions have been made, the people said. Bloomberg News first reported about SIA’s presentation in 2023.

The companies that could be blacklisted include chipmakers Qingdao Si’En, SwaySure, and Shenzhen Pensun Technology Co., or PST, the people said, asking not to be named because they weren’t authorized to discuss non-public information. Biden officials are also weighing sanctions on China’s leading memory chipmaker, ChangXin Memory Technologies Inc.

“Adding more Chinese companies to the US Entity List is a highly likely event,” Jefferies analyst Edison Lee wrote after ChangXin was identified as a potential target. “It is easy to implement and justify, and it will further block certain key Chinese companies from being able to exploit current loopholes in export restrictions.”

Beyond companies that actually produce chips, US officials may also sanction Shenzhen Pengjin High-Tech Co., according to the people, as well as SiCarrier, one of the people said. The concern is that those two companies, which make semiconductor manufacturing gear, are acting as proxies to help Huawei obtain restricted equipment, according to the person. Bloomberg News first reported on the companies’ ties to Huawei in late 2023.

The US government is pressing allies including the Netherlands, Germany, South Korea and Japan to further tighten restrictions on China’s access to semiconductor technology. Huawei is one of the companies at the heart of that campaign, as well as Beijing’s efforts to reduce its reliance on Western technology.