The United States plans to extend sanctions against Huawei, which would thwart an important deal that NVIDIA hoped to strike with this Chinese brand.
NVIDIA is in big trouble after revealing the US government’s preliminary plans to extend its sanctions against Huawei.
According to Reuters, the report speaks directly to NVIDIA, stating that it will “have a significant economic impact” on the company.
Bad news
The Joe Biden administration is considering restricting the items it allows US companies to ship to Huawei, a company that has been on a US trade blacklist since 2019 but still receives billions of US products under a special plan being implemented by the Donald Trump administration. .
However, with the draft seen by the outlet, now “the proposed 2023 license amendment (Department of Commerce) has the potential to have a significant economic impact on NVIDIA,” referring to the company’s “outstanding license value.”
The document shows that the Biden administration is trying to assess the impact on American companies of Huawei’s proposed policy changes before imposing new rules that could affect annual cash flows.
A government source indicated that the initial draft “was not approved in this way.” He said that the government had “written and contracted multiple reports on this subject, based on different contingencies, which came to very different conclusions.”
More Consequences
Another company that will have an impact on its economy, but in a moderate way, is Qualcomm.
The report noted that Qualcomm would likely suffer a “moderate economic impact” from the policy change. In fact, the loss of access to Qualcomm’s modem chips will have an even bigger impact on Huawei, the report predicts, as the Chinese giant “relies heavily on Qualcomm’s modem chips to power its smartphone offerings.” “.
Huawei was blacklisted in 2019 amid concerns it could spy on Americans and allegations of intellectual property theft and sanctions violations. The United States requires suppliers to seek a proprietary license that is typically denied when they sell American products to publicly traded companies. But the Trump administration has instituted a more lenient policy on Huawei, blocking its access to 5G chips and allowing other items, such as 4G chips, to be shipped to the company.
