Huawei’s new phone contains an advanced chip that represents a new technological peak for China. Despite being the target of some of the strictest American sanctions, the development has caused a stir in Washington, D.C. There has been extra attention on the issue given the White House’s focus on limiting Beijing’s ability to develop a native advanced semiconductor industry, most prominently through export controls announced last October.
Before Huawei’s announcement, there was already an understanding that the U.S.’ export control regime was imperfect. Foreign Policy outlined how several known loopholes exist, including smuggling chips into China from neighboring countries or via shell companies. This black market is somewhat of an unavoidable pitfall in the American sanctions regime, given its reliance on other countries to police their borders. Huawei is even reportedly creating its “shadow manufacturing network that would let the blacklisted company skirt US sanctions,” per Bloomberg. The idea behind this scheme is these subsidiaries would not have clear ties to Huawei and thus be able to acquire equipment and technology that the business could not otherwise legally obtain.
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