US President Donald Trump signed an executive order Wednesday that allows the US to ban telecommunications equipment and services from foreign companies that could pose a threat to national security, making good on a threat that escalates the battle against Chinese telecom giant Huawei.
The order doesn’t list any countries or companies by name but it instructs the Commerce Secretary, Wilbur Ross, to ban transactions “posing an unacceptable risk,” which include import of gear or services from companies that have close ties to foreign governments and could use their equipment to monitor or disrupt US telecommunications or other infrastructure.
In addition to the executive order, the Commerce Department said on Wednesday that it had placed the Huawei and 70 of its affiliates on a list of firms that are deemed a risk to national security. Companies on the so-called Entity List would not be allowed to buy American components and technologies without US government approval.
The executive order invoked the International Emergency Economic Powers Act, which authorizes the president to regulate commerce after declaring a national emergency in response to any unusual threat to the US with a foreign source.
Huawei said in a statement sent to TechNode on Thursday that “restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives.”
“In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues,” said the company.
The executive order, together with the Commerce Department’s Entity List, have put Huawei into the same highly risky situation that its peer ZTE was in a year ago which nearly vanquished the company.
“Although Huawei is somewhat more independent from US tech than ZTE, it still relies on [the US] for key parts of its business,” said Stewart Randall, head of electronics and embedded software of Shanghai-based consultancy Intralink.
Huawei has its own chip design subsidiary, HiSilicon, so it does not rely on US semiconductor supplier Qualcomm, said Stewart. “But HiSilicon still needs American components, IP, and tools to design new chips. Without these, it would either slow down or stop chip design. Either way, products would come out behind competitors and would be highly damaging.”