The inclusion of Huawei into the U.S. Department of Commerce’s Entity List and consequent restrictions to work with the Chinese giant clearly made it much harder for the U.S.-based companies to conduct business with Huawei. Yet, it did not make it completely impossible as companies could apply for special licenses. Despite over 160 companies applying for licenses, it has taken a long time for them to be issued. We saw Huawei’s notebooks recently come back to the Microsoft store, and yesterday during an call, Micron announced it is one of the first U.S. companies to recently obtain the required licenses, and they can resume selling various types of products to Huawei.
Because of the Export Administration Regulations and Entity List restrictions imposed on Huawei, companies that develop and make products in the U.S. could no longer sell them to Huawei. As a consequence, companies like Intel, Google, Microsoft, Micron, and many others had to stop working with their Chinese partner, which had a drastic impact on their business as the Chinese telecom giant is clearly a major customer buying a large number of hardware and software products.
Micron was allowed to sell and support some of its products to Huawei, but it was forbidden to supply Huawei with new products or sign new sales agreements. In the recent weeks the company obtained a license from the U.S. administration to qualify and sell new products (e.g., DRAM modules/chips, SSDs, 3D NAND memory, etc.) with Huawei’s mobile and server business units. Meanwhile, since new sales agreements take months to complete, Micron does not expect the licenses to have an impact on its sales in upcoming quarters.
Earlier this year Google and Microsoft were allowed to support existing Huawei devices running Android and Windows. Furthermore, Huawei recently launched new laptops based on CPUs from AMD and Intel as well as running Windows 10. There were reports that Huawei obtained processors from third-party resellers, but it was unclear whether this was the case with software licenses. In any case, it is important that at least some of the U.S.-based companies can now resume their work with Huawei officially.
The statement from Micron reads as follows:
As previously disclosed, we are continuing to ship some products to Huawei that are not subject to Export Administration Regulations and Entity List restrictions. We applied for, and recently received, all requested licenses that enable us to provide support for these products, as well as qualify new products for Huawei’s mobile and server businesses. Additionally, these licenses allow us to ship previously restricted products that we manufacture in the United States, which represent a very small portion of our sales. However, there are still some products outside of the mobile and server markets that we are unable to sell to Huawei.
Receiving the licenses is a positive development, and we are thankful to the U.S. administration for approving these licenses.
Prior to receiving these licenses, Entity List restrictions severely limited our ability to qualify new products at Huawei. Although we are now able to qualify new products with Huawei’s mobile and server businesses, it will take some time before the qualifications are completed and contribute to revenue. Consequently, we do not expect these licenses to have a material impact on our revenue in the next couple of quarters.
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