The U.S. Commerce Department on Friday took new steps aimed at blocking global semiconductor supplies to Huawei Technologies Co., ratcheting up the pressure on the already blacklisted Chinese telecom-equipment giant that is seen as a threat to U.S. national security.

The department said the new rules restrict "Huawei's ability to use U.S. technology and software to design and manufacture its semiconductors abroad." Foreign companies that use U.S. chip-making equipment will be required to obtain a U.S. license before supplying certain items to Huawei.

"This announcement cuts off Huawei's efforts to undermine U.S. export controls," the department said in a press release.

President Donald Trump's administration views Huawei -- a leader in next-generation wireless networks known as 5G -- as a national security threat, suspecting its equipment could be used for cyberespionage. Huawei denies such allegations.

Last May, Huawei and its non-U.S. affiliates were placed on the department's blacklist known as the "Entity List." U.S. companies wishing to export items to the listed entities must obtain a license.

But the department said it decided to take tougher steps as Huawei has "continued to use U.S. software and technology to design semiconductors, undermining the national security and foreign policy purposes of the Entity List by commissioning their production in overseas foundries using U.S. equipment."

In an effort to minimize the adverse economic impact on companies, materials that are in production as of Friday will be afforded a 120-day grace period, according to the department.

China is planning to take a series of countermeasures against the U.S. action, including putting U.S. companies on an "unreliable entity list," China's Global Times, a nationalistic tabloid affiliated with the Chinese Communist Party, reported Friday.

Other countermeasures could include launching investigations, imposing restrictions on U.S. companies such as Apple Inc., and halting purchases of airplanes made by Boeing Co., the report said, citing a source close to the Chinese government.

U.S. Secretary of State Mike Pompeo criticized Huawei as "an untrustworthy vendor and a tool of the Chinese Communist Party," while vowing to "continue to restrict most U.S. exports" to Huawei and its affiliates for activities that threaten U.S. national security and international stability.

Huawei has been a source of friction between the United States and China, which are now seeing their relationship deteriorate over the response to the coronavirus pandemic.

Taiwan Semiconductor Manufacturing Co., the world's largest dedicated semiconductor foundry, on Friday announced a $12 billion project to build a plant in Arizona.

But a U.S. government official said there is no assurance that it will be granted a license to sell U.S. technology.

"I think roughly around 10-12 percent of TSMC's business is China, and I think that is, in essence, almost primarily Huawei," Keith Krach, undersecretary of state for economic growth, energy and the environment told reporters.

"So they will be restricted unless they're granted a license, and there's no assurances on that and we don't anticipate that," the official said.


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