US expands blacklist but gives Huawei another 90-day reprieve

The US Commerce Department said Monday it is adding more than 45 new businesses associated with Huawei, the embattled Chinese technology giant, to an export blacklist.

At the same time, Commerce said it was renewing a temporary general license that permits companies in the United States to sell products to Huawei on a limited basis, such as to provide security updates to Huawei devices. The renewal lasts for 90 days and went into effect on Monday.

Huawei is a fulcrum in Trump’s wider trade war with China. On Sunday, Trump tweeted that the United States is “doing very well with China, and talking!” after economic adviser Larry Kudlow appeared to indicate progress toward a deal.

Meanwhile, on Fox Business on Monday, Commerce Secretary Wilbur Ross claimed that Chinese vendors have borne “all or part of the hit” from Trump’s tariffs on Chinese-made goods.

In a statement announcing the entity list move, Ross said the extension of the temporary general license reflects that “more time is necessary to prevent any disruption.”

Although the extension is a good thing for Huawei’s business, the company continues to vehemently oppose its inclusion on the blacklist. The US government has now expanded the ban to include Huawei and 118 of its affiliated businesses.

“It’s clear that this decision, made at this particular time, is politically motivated and has nothing to do with national security,” Huawei said in a statement. “These actions violate the basic principles of free market competition. They are in no one’s interests, including US companies. … The extension of the Temporary General License does not change the fact that Huawei has been treated unjustly.”

The United States has long argued that Huawei poses a national security threat, and has claimed Beijing can use the company’s products to spy on other nations. That claim has driven the US government to urge its allies to restrict or ban the use of Huawei equipment in their 5G networks — efforts that would hurt Huawei’s efforts to become the global leader of the next generation of wireless technology. Huawei denies that any of its products pose a national security risk.

Washington escalated its battle with Huawei in May when it placed the company on a trade blacklist, barring American companies from selling the company software and components without a license.

Those restrictions created uncertainties for the company’s relationships with its partners, including Google and mobile operators that sell its smartphones.

The Commerce Department clarified in a document sent to CNN Business what kinds of products the temporary general license permits US companies to continue selling to Huawei. These include components for consumer tech devices like the chips sold by Intel (INTC), Micron (MICR) and others for Huawei smartphones, tablets or wifi routers. It also allows for the sale of software for bug fixes or security vulnerabilities for smartphone operating systems.

Huawei smartphones run on Google’s Android operating system and come with popular apps like Google Maps and Gmail. Without access to Google services, Huawei’s devices become a lot less attractive to users outside of China.

Last quarter, global sales accounted for about one third of Huawei’s smartphone shipments, according to researchers at IDC. In 2018, before the ban, Huawei sold nearly half of its smartphones outside of China. The company also faces fierce competition from Samsung and rival Chinese companies.

Huawei is trying to protect its smartphone business in case it can’t work with Google in the future. Earlier this month, the company announced its own operating system, called Harmony, which can in theory be used to replace Google’s Android in Huawei smartphones and other devices.

“Today’s decision won’t have a substantial impact on Huawei’s business either way,” the company said. “We will continue to focus on developing the best possible products and providing the best possible services to our customers around the world.”

However, the company’s challenge with its new operating system will be getting developers to build apps for it.