It isn’t surprising to hear about Huawei’s attempts to circumvent US sanctions that prevent it from buying products, technologies, and even software from former partners like Qualcomm and Google. For example, it ordered some 4G-only Snapdragon chips to bypass its ban from touching anything related to 5G. Some lawmakers and government officials in the US see its sale of Honor to a consortium as one of those evasive maneuvers and want the former subsidiary to be put on the same Entity List. Unfortunately for them, their own colleagues have placed the decision in a deadlock.
Huawei was put in the US government’s entity list under the Trump administration for allegedly being a national security threat and for violating trade bans with countries like Iran. Being on that list meant that it could not do business with US companies without a license from the US Commerce Department, specifically when it comes to purchasing US products related to 5G networks. This put not only Huawei’s smartphone and networking hardware business at risk but also chip maker HiSilicon and subsidiary phone manufacturer Honor.
To keep Honor from folding, Huawei sold off Honor to a consortium of over 30 agents and dealers last year. Some in the US, however, took issue with how that consortium still has alleged ties to state-backed investors and even has former Huawei executives at the helm. Unsurprisingly, US lawmakers and some agencies want Honor to suffer the same fate as its former parent.
Fortunately for Honor, the vote has been split between two equal halves of the decision-making body. The Pentagon and Energy department want Honor to be sanction while the Commerce and State departments are of the opposite opinion. In the event of a prolonged impasse, the Cabinet could make that call in the end, or even President Biden himself could make the final decision. Biden’s administration has made no effort so far to remove Huawei from the entity list.
The debate pretty much revolves around whether Honor, who doesn’t sell smartphones in the US and doesn’t make networking equipment like Huawei, can actually be considered a national security threat. Some cite the lack of concrete evidence tying it to the Chinese government to be enough reason to exclude Honor from the list. Others argue, however, that China’s state-backed ownership structure and party-state economy pretty much guarantees that it is.