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Intel exec: Why Trump's ban on Huawei is wrong

Krystal Hu
Reporter
Intel has stopped doing business with Huawei after the Trump administration blacklist the firm. (Photo by Emin Menguarslan/Anadolu Agency/Getty Images)

American tech companies may be restricting their dealings with Huawei following the Trump administration’s ban on the Chinese telecom giant, but they are also speaking up against it in an effort to reverse the ban.

Intel (INTC) is working closely with Washington as well as Huawei’s CEO Ren Zhengfei to mitigate the ban’s impact on the U.S. chipmaker, Peter Cleveland, deputy general counsel and the vice president of the law and policy group at Intel, said to a group of Chinese investors on Monday. Intel is a supplier to Huawei, which accounts for about 1% of Intel’s revenue, according to Goldman Sachs.

“A more constructive approach, where we can find solutions to address cyber hygiene in Huawei’s networks, in a positive way and informative way, so that there's more testing in their networks, would be more effective, rather than a sledgehammer approach that wipes out their business here,” said Cleveland.

Speaking at the China General Chamber of Commerce–USA Summit, Cleveland said the business environment in the U.S. has become more difficult for Intel, with tariffs, entity listings and sanctions that are impacting its Chinese business partners.

The regulatory measures against Huawei and ZTE and newly-passed laws banning Chinese surveillance products from Hikvision and Dahua “is a great concern to the Intel Corporation,” Cleveland said.

“The challenges now are the fundamental variability, the inconsistency and the arbitrariness that enters into the decision making by the administration,” said Cleveland. “They have very strong views about U.S. national security, but that cannot come at the expense of the economic competitiveness of the country.”

Banning Huawei is a risky move

Intel has expressed its concerns to President Donald Trump, according to Cleveland. “So we have a lot of goodwill, a lot of capital, a lot of prestige that we work with in the nation's capital, and will continue to do that.”

Intel is not alone in its effort to seek exemptions from the U.S.’s ban on Huawei. Google has warned the Trump administration that it risks compromising U.S. national security if the sweeping export restrictions on Huawei persist.

Targeting Chinese companies by administrative measures also sets an example for the Chinese side to mirror, Cleveland said. Beijing already said it will create its own “unreliable list” in response to Washington’s entity list. The list could include companies that would cut supply to U.S. firms. Meanwhile, another U.S. company, FedEx, is being investigated for allegedly diverting Huawei’s packages.

Intel is one of the most successful American companies in China. In 2018, China contributed to over a quarter of Intel’s $70.8 billion in revenue.

“It constrains our economic competitiveness and then has a ricochet effect in Beijing. Obviously, your country then takes similar steps,” Cleveland said. “So the results are negative on both sides.”

Krystal Hu covers technology and China for Yahoo Finance. Follow her on Twitter.

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