The US government on Friday imposed new restrictions on Chinese tech giant Huawei, severely limiting its ability to use American technology to design and manufacture semiconductors produced for it abroad.
Commerce Secretary Wilbur Ross said the move aims to prevent Huawei from making a run around existing US sanctions.
"There has been a very highly technical loophole through which Huawei has been able to in effect use U.S. technology," Ross told Fox Business. "We never intended that loophole to be there."
Adam Segal, a senior fellow at the Council on Foreign Relations, said the move "looks like a victory for the people who really want to drive the nail, or what they think will be the nail, in Huawei's coffin."
The new restrictions elicited an angry response from China, which threatened retaliation against US companies.
Chip design and manufacturing equipment used in the world's semiconductor plants is mostly US made, so the new rule aims to impact multiple foreign producers that sell to Huawei and affiliates including HiSilicon, which makes chips used in supercomputers with scientific and military uses. The Commerce Department said foreign foundries would be granted a 120-day grace period for chips already in production.
Under the new rules, foreign semiconductor makers must obtain a license from U.S. officials in order to ship Huawei-designed semiconductors to the Chinese company that were produced using US technology.
Last year, the Trump administration barred US firms from using Huawei technology or providing technology to the Chinese firm without government approval, deeming it a national security risk.