Sources: US Department of Commerce is close to signing off on a rule allowing US companies to work with Huawei on setting 5G network standards
(Reuters) - The U.S. Department of Commerce is close to signing off on a new rule that would allow U.S. companies to work with China's Huawei Technologies …
Context & Ripple Effects
Commerce has been managing Huawei on two tracks: repeated short extensions of its buying license through 2019 — including another 90-day extension as the August deadline hit — alongside a February proposal to require licenses for any foreign fab making Huawei chips with US equipment (the foreign-direct-product restriction). The standards carve-out now under consideration is the first sign the department sees that approach cutting against US interests.
The problem it solves is self-inflicted: with US firms barred from engaging Huawei even in standards bodies, American engineers have been absent from the room where 5G specifications get written. The June amendment reported afterward confirms the rule went through, letting US companies collaborate with Huawei on 5G standards specifically.
First-order effects
- US companies regain permission to sit in standards-setting discussions alongside Huawei on 5G, ending a year in which the entity-list restrictions kept them out of technical bodies their Chinese rival still attends.
- Huawei keeps its seat at the table uncontested by American delegates no longer — though its chip sourcing remains constrained by the separate February licensing proposal.
Second-order effects
- The carve-out sharpens the split in Washington's own policy: procurement is tightening in parallel, with the US finalizing a federal contract ban covering Huawei, Hikvision, Hytera, Dahua, and ZTE weeks later — so vendors can now write standards with Huawei while being barred from buying its gear for government work.
- For US network-equipment and component makers, standards influence becomes the one channel of Huawei engagement left open, concentrating competitive strategy there while supply-chain ties stay frozen.
Third-order effects
- If the pattern holds, US export controls settle into a two-layer structure: hard walls around chips and procurement, deliberate openings where absence would cost America agenda-setting power — an acknowledgment that blanket disengagement cedes standards authority rather than protecting it.
- Meanwhile the leverage behind these rules erodes from the other side: teardowns show Huawei phones at 57% Chinese-made components and China pushing a 50% domestic-equipment requirement for new chip capacity, so each round of restrictions accelerates the substitution that makes them less binding.
The trend: US tech containment toward Huawei is becoming selectively porous — supply chains and procurement stay walled off while standards-setting engagement is deliberately preserved.