Nvidia headquarters seen on February 22, 2023 in Santa Clara, California.
Justin Sullivan | Getty Images News | Getty Images
American chip maker Nvidia’s Plans to sell technology to China’s Huawei would be scuppered if the US government goes ahead with a proposal to further restrict shipments to the blacklisted company, a draft report by a government contractor shows.
The Biden administration has considered limiting the items it allows U.S. companies to send to telecom equipment giant Huawei Technologies, which was added to a U.S. trade blacklist in 2019 but continues to receive billions in U.S. goods under a special plan implemented by the Trump administration .
“The proposed 2023 change to (the Commerce Department’s) licensing is likely to have a large financial impact on Nvidia,” according to excerpts from the draft report seen by Reuters, citing the company’s “pending license value.”
Nvidia’s plans to sell to Huawei have not previously been reported.
An Nvidia spokesman declined to comment on the document, saying: “The Chinese market represents a significant opportunity for the US semiconductor industry. While we cannot comment on any pending license requests, we are working with customers and partners worldwide to comply with all applicable export controls and meet market demand.”
A senior State Department official said the document was a preliminary draft prepared by a contractor, and that the department “would not have approved the report in its current form.” It also said that the government “has written and contracted several reports on this subject, based on different events, which arrive at very different conclusions.”
The White House and the Commerce Department declined to comment. Huawei did not respond to a request for comment.
The document shows the Biden administration is trying to assess the impact on U.S. companies of proposed Huawei policy changes before imposing new rules that could choke projected revenue streams at a time when the tech industry is already reeling. It also provides an unusual insight into the politically sensitive issue of which American companies are seeking business ties with Huawei, one of Washington’s most chastised Chinese companies.
Reuters was unable to find out the details of the specific policy change whose impact was assessed in the report.
The report suggested Qualcomm would likely suffer a “moderate economic impact” from the change in policy, unlike Huawei. In fact, the loss of access to Qualcomm’s modem chips would have a greater impact on Huawei, according to the report, as Huawei “relies heavily on Qualcomm’s modem chips to support its smart phone offering.”
Qualcomm did not respond to a request for comment.
Reuters reported in 2021 that US officials had approved license applications worth hundreds of millions of dollars for Huawei to buy chips for its growing auto components business, including automotive components such as video displays and sensors, as trade restrictions crippled other business areas.
Huawei was placed on the “entity list” in 2019 amid fears it could spy on Americans and accusations it stole intellectual property rights and violated sanctions. The US requires suppliers to apply for a special license which is usually denied when selling US goods to companies on the list. But the Trump administration imposed a more lenient policy on Huawei, blocking its access to 5G chips but allowing other items such as 4G chips to be sent to the company.
The Commerce Department’s top export control official, Alan Estevez, said this week that the Trump-era policy allowing US technology below the “5G level” to be shipped to Huawei was “under review.”
But sources say there are differences within the administration’s odds on how far to go: some officials favor blocking all licenses to Huawei suppliers and revoking existing authorizations, while others want to extend the restrictions to only 4G chips and other targeted technologies going forward.