U.S. set to further restrict Huawei suppliers with new regulations

The legal loophole being used by U.S. chipmakers to get around the ban may soon be closed too.

What you need to know

• Commerce Secretary Wilbur Ross has confirmed that more limits will soon be placed on U.S. companies trading with Huawei.
• The new rules are expected to be announced in the near term.
• Additionally, the U.S. government is working on a new regulation that will allow it to restrict exports of products designed in the country but manufactured overseas.

Huawei founder Ren Zhengfei had recently said at the World Economic Forum at Davos that his company was ready for further U.S. escalation and is spending billions on a backup plan to ensure its business is not affected significantly. Strangely enough, U.S. Commerce Secretary Wilbur Ross today revealed that new rules that will put more limits on companies doing business with Huawei are coming soon.

Ross told Bloomberg that the new rules are "works in progress" and will come into effect in the near-term. He added that the ultimate U.S. objective with the restrictions is to protect national security and not cutting Huawei off from all American supplies.

The U.S. government is currently said to be taking a look at export control mechanisms to make sure companies are not able to keep selling components to Huawei by citing rules that limit the government's ability to restrict exports. A new regulation governing the direct supply of products is apparently under consideration as well. It is expected to make its way through within the next few weeks, according to people familiar with the matter.

Even though Huawei has no immediate plans to switch to HarmonyOS for its phone, it is investing a lot of money on building replacements to Google services and bolstering its app store.

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