New U.S. defense bill to increase restrictions for Huawei chip suppliers

The U.S. is preparing a new defense bill that could impact China and Huawei chip suppliers. While the bill will introduce new security measures for the US government, it may create more problems for Chinese firms and their chipset industry.

As noted by Bloomberg, the U.S. defense bill includes a significant rule that blocks the “business” route for Huawei chip suppliers. It limits the Pentagon company from teaming up with firms linked with Huawei that supply it with PC chips and services.

The Pentagon is a large five-sided U.S. Department of Defense headquarters in Virginia. Over 23000 military and civilian employees as well as 3000 non-defense support personnel work in this building, contributing to U.S. security from all sides.

Earlier, a report said that the Pentagon has been struggling with the rules that prevent it from doing business with Huawei. The US restricts it to tied up with any firm that uses Huawei network solutions or other relevant Chinese tech equipment.

Now the U.S. authorities made this rule even tougher. The new bipartisan National Defense Authorization Act prohibits all those defense department contractors that were selling chipmaking tools to Huawei or its chip suppliers in China to date.

U.S.-China chip business war

The Act also prevents firms like the Pentagon from doing business with any of the Huawei chip suppliers. The respective bill could soon enter the law book as the lawmakers consider it a “must-pass” before Congress adjourns this year.

When approved, the bill will likely result in major risks for Huawei chipset suppliers as global firms will pull their hands from the cooperative business. The bill also suggests that the Pentagon (which invested $460 billion on contracts) will cut off ties with those who continue to work with Huawei.

U.S. is planning to toughen the sanctions on Huawei and Chinese firms, and the new bill seems a major connecting point in this theory. Even though the Commerce Department has been allowing Huawei to access a limited flow of “less-sensitive” goods so far, the new bill may snatch away that benefit too.

New U.S. defense bill to increase restrictions for Huawei chip suppliers (Image Credits: Weibo)

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