In a significant legal development, Huawei Technologies, a leading global player in the networking industry, is now facing criminal charges in the U.S. This follows a ruling by U.S.
District Judge Ann Donnelly, who on Tuesday, dismissed Huawei’s request to throw out a 16-count federal indictment. In her comprehensive 52-page decision, Judge Donnelly noted that Huawei’s request was premature, allowing the charges to stand.
The charges against Huawei are serious, with the company accused of a range of illegal activities. These include stealing technology, engaging in racketeering, wire and bank fraud, and various other offenses. Among the specific allegations, the U.S. accuses Huawei and some of its subsidiaries of attempting to illegally acquire U.S. trade secrets. Additionally, Huawei allegedly installed surveillance equipment that enabled Iran to monitor anti-government protesters back in 2009. The company is also accused of violating U.S. sanctions by conducting business with North Korea.
Huawei’s legal troubles are a continuation of the U.S. government’s ongoing concerns about national security. Since 2019, the U.S. has considered Huawei a national security threat, placing it on the Entity List. This designation restricts the company from acquiring U.S.-origin parts and components unless they are granted a special license by the U.S. Commerce Department.
One year after the Entity List designation, the U.S. tightened the restrictions further by invoking the Foreign-Produced Direct Product Rule (FPDPR). This rule blocks any company that uses American technology to manufacture chips from selling those chips to Huawei without a license. In response, Huawei developed its own HarmonyOS operating system, but replacing key components like chips has proven more challenging.
Although Huawei initially managed to circumvent some of these restrictions by using its remaining stock of Kirin 9000 chips, the company soon faced further setbacks. Qualcomm was granted licenses to modify and supply Snapdragon chips, but these chips were adjusted so they would not support 5G networks, continuing to limit Huawei’s access to 5G technology. However, in 2023, Huawei made a remarkable comeback by using a 7nm chip developed by China’s SMIC foundry, which supported 5G functionality, enabling the company to sell 5G-enabled phones once again. This move shocked the wireless industry, given the ongoing technological blockade.
Despite these advances, Huawei remains at a technological disadvantage, as both its own production capabilities and China’s SMIC foundry are hampered by the inability to obtain advanced lithography machines, which are crucial for manufacturing cutting-edge chips. As a result, Huawei’s chip designs are far behind those of competitors like Apple, Qualcomm, and MediaTek.
In response to the legal and economic pressures, China has accused the U.S. of “economic bullying” and of using national security concerns as a pretext for suppressing Chinese companies. Huawei, in its defense, claims that the allegations against it are vague and unsubstantiated.