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Biden Allows Sale of American Auto Chips to Blacklisted Huawei

Arvind Datta
Arvind is a recluse who prefers staying far away from the limelight as possible. Be that as it may, he keeps a close eye on what's happening and reports on it to keep people rightly informed.
Published: September 1, 2021
Washington approved the sale of auto chips to Huawei due to pressure from U.S. companies, says Global Times.
Washington approved the sale of auto chips to Huawei due to pressure from U.S. companies, says Global Times. (Image: brookhaven via Pixabay)

Joe Biden’s administration recently approved the sale of hundreds of millions of dollars worth of auto chips to Huawei despite it being listed on a trade blacklist. The CCP-backed Global Times claimed in an article that American companies forced Washington to make this decision.

The licenses will allow American firms to sell vehicle components like sensors and video screens to the Chinese company. The article states that Huawei used to be one of the biggest customers of the American chip industry prior to being blacklisted for trade by the Trump administration. Huawei spent $12 billion annually buying chips from the United States, contributing to 40,000 American jobs, says the report. 

The article concluded that the ban on the sale of components to Huawei negatively affected American companies. Ma Jihua, a close Huawei follower and veteran industry analyst, stated that Washington will get more lenient on chip sales.

“The U.S. will relax chip bans on Huawei in the future; since it has already realized that its sanctions could be less threatening to the Chinese firm’s overall business than previously thought, and U.S. firms’ businesses also hinge on the company,” Ma told the Global Times.

Republican Senator Marco Rubio challenged the Biden administration’s decision to approve the sale of auto chips to Huawei. Rubio said it’s an example of the government failing to protect America’s national and economic security.

In a statement, the senator said that Huawei is an “arm of the Chinese Communist Party.” The company has a “long history” of stealing intellectual property and exporting Beijing’s digital authoritarianism. He asked the Biden administration to increase restrictions and penalties on Huawei and other Chinese tech firms rather than granting waivers.

Republican Representative Brad Wenstrup is the GOP leader of the House Defense Intelligence subcommittee. Wenstrup declared the decision to be another one of Biden’s foreign policy failures. 

“Whether it be through approving the Nord Stream 2 pipeline in Russia, the disastrous mishandling of the Afghanistan withdrawal, or now reports of allowing the sale of microchips to a [Chinese Communist Party]-backed telecom giant, the Biden administration continues to jeopardize Americans’ safety and security while handing strategic advantages to our adversaries… He must immediately reverse this decision,” Wenstrup said in a statement.

Auto chip shortage

Biden’s decision comes as the world is facing chip shortages triggered by a year of COVID-19 pandemic restrictions and lockdowns. The production of semiconductor chips declined with factory shutdowns. The hardest-hit sector has been the auto industry.

Many automakers canceled their chip orders due to the ongoing pandemic. However, the restrictions also meant that demand for computers, 5G equipment, and gaming systems skyrocketed. By the time automakers realized that people still wanted to buy vehicles, they were pushed back in the queue for chips. As a result, experts predict manufacturing activity in the auto sector to decline this year.

According to a report by IHS Markit, the chip crisis will not be over before Q2, 2022. It predicted the global auto industry to manufacture up to 7.1 million fewer vehicles this year. Additionally, Malaysia’s COVID-19 lockdown will also affect supply chains in the near term. The country is an important destination for the assembly and testing of devices that control car engines. 

There is an increased push to expand chip production capacities worldwide as countries realize the importance of the sector. The U.S. is pushing forward legislation worth $52 billion to develop the industry. South Korea announced an investment of $450 billion while the EU wants to invest $160 billion in semiconductors.

“The push for building IC capacity around the world will certainly drive fab investment of the current decade to a new high… We expect to see record spending and more new fab announcements in the next few years,” Christian Gregor Dieseldorff, senior principal for semiconductors at SEMI, told IEEE Spectrum.

In an interview with CBS News, Intel CEO Pat Gelsinger said that the United States accounted for 37 percent of global semiconductor manufacturing 25 years ago. Now, it accounts for just 12 percent. He said that the situation “doesn’t sound good” and wants Washington to partner with the private sector to invest in the country’s chip manufacturing capabilities.

“Relying on one region, especially one as unpredictable as Asia, is highly risky. Intel has been lobbying the U.S. government to help revive chip manufacturing at home – with incentives, subsidies, and-or tax breaks, the way the governments of Taiwan, Singapore, and Israel have done,” Gelsinger said.