U.S. Restrictions on Huawei Technologies:
January 5, 2022
National Security, Foreign Policy, and
Jill C. Gallagher
Economic Interests
Analyst in
Telecommunications
Huawei Technologies Co., Ltd., is a China-based company that designs, manufactures, and sells
Policy
telecommunications network equipment and devices. Founded in 1987, the company has grown

from a small reseller of imported telephone switches into a multinational conglomerate with
revenues of $138 billion in 2020 and a presence in over 170 countries. Huawei is estimated to be

the largest of the four major global network equipment makers , which also include Finnish firm
Nokia, Swedish firm Ericsson, and Zhong Xing Telecommunication Equipment (ZTE), a Chinese firm that is partially state-
owned.
For more than two decades, U.S. government officials have raised national and economic security concerns about Huawei,
citing its ties to the Chinese government and military, sanctions violations and unfair trade practices, preferential Chinese
policies and financing that enabled its expansion globally, and the potential for espionage or sabotage of U.S. and global
networks. With the emergence of fifth-generation (5G) telecommunications technologies that enable greater connectivity
among billions of personal, business, and industrial devices and networks, U.S. concerns have become more pronounced.
There has been support in Congress for policies and restrictions aimed at securing U.S. networks and supply chains, and
limiting Huawei’s presence in global networks. In 2017, Congress passed legislation restricting the use of Huawei equipment
in certain Department of Defense (DOD) networks. In 2018, it prohibited U.S. agencies from obtaining equipment, systems,
and services that use Huawei equipment or services as a substantial or critical component, and prohibited the use of federal
grants and loans for Huawei products. In 2019, the Department of Justice (DOJ) charged Huawei and its officials with
financial fraud and sanctions violations. The Department of Commerce (DOC) subsequently added Huawei to the Entity
List—a trade restriction list published by DOC’s Bureau of Industry and Security—requiring companies to obtain a license to
export goods to Huawei. In 2020, DOJ charged Huawei with racketeering, conspiracy to steal trade secrets, and sanction
violations; DOC tightened restrictions on exports, limiting Huawei’s access to foreign-produced semiconductors made with
U.S. technologies; and Congress provided $1.9 billion to remove Huawei equipment from U.S. networks.
The Biden Administration upheld the Huawei-related restrictions imposed by the Trump Administration and tightened
restrictions on sales of semiconductors for 5G devices. However, both Administrations allowed over $60 billion in
transactions between U.S. firms and Huawei, which some lawmakers have questioned. The 117th Congress has acted to
prohibit future use of Huawei equipment in the United States. P.L. 117-55 requires the Federal Communications Commission
(FCC) to adopt rules clarifying it will no longer review or issue equipment licenses to companies that pose a national security
threat, which include Huawei. Members have proposed legislation requiring DOC to certify certain conditions before
removing Huawei from the Entity List (S. 568 and H.R. 4561). Other bills contain similar certifications, add certain Huawei
affiliates to the Entity List, and require DOC to report on license applications and approvals (H.R. 1595 and H.R. 4792). S.
1260, which passed the Senate in June 2021, contains similar certifications and would also provide funding to bolster U.S.
semiconductor manufacturing; foster the development of secure and trusted telecommunications technologies and supply
chains; promote initiatives to increase U.S. participation in standards development bodies; and develop partnerships and
programs to counter Huawei’s global expansion.
As Congress considers new restrictions on Huawei, it may seek to examine the impact of the existing restrict ions on national
security, foreign policy, and the economic competitiveness of U.S. firms and develop policies that balance objectives in each
of these areas. U.S. policies and restrictions require agencies and businesses to identify and remove Huawei equipment from
telecommunications networks and to scrutinize supply chains, which many experts see as a necessary step to improving U.S.
network security. However, some U.S. agencies argue the restrictions could disrupt U.S. agency work, businesses, and
services to consumers, citing implementation challenges and the mandated timelines for compliance. Additionally, some
experts warn the restrictions could reduce revenues for some U.S. suppliers to Huawei and lead to reduced funding for
research and development, affecting U.S. competitiveness. China experts note that the restrictions may trigger retaliatory
action by the Chinese government, which could move to exclude U.S. firms from the Chinese market and supply chains.

Congressional Research Service

U.S. Restrictions on Huawei Technologies

Introduction
Huawei Technologies Co., Ltd., is a China-based company that designs, manufactures, and sel s
telecommunications network equipment and devices. For more than two decades, U.S.
government officials have raised national and economic security concerns with Huawei, citing its
ties to the Chinese government and military, preferential Chinese policies and financing that
enabled its growth and expansion global y, and the potential for espionage.1 There has been
support in Congress for policies that prohibit use of Huawei equipment in U.S. networks,2 restrict
Huawei’s access to U.S. technologies,3 and promote the development and use of secure and
trusted network equipment in the United States and global y.4
In 2017, the U.S. government began imposing restrictions on the use of Huawei equipment in the
United States. In December 2017, Congress prohibited use of Huawei equipment in certain
Department of Defense (DOD) networks (P.L. 115-91, §1656). In 2018, it prohibited U.S.
agencies from obtaining Huawei equipment, systems, and services, and use of federal grants for
Huawei equipment (P.L. 115-232, §889).
In January 2019, the Department of Justice (DOJ) brought criminal charges against Huawei and
its officials for financial fraud and sanctions violations.5 On May 15, 2019, President Trump
signed Executive Order 13873, Securing the Information and Communications Technology (ICT)
Services Supply Chain, prohibiting the purchase or use of any ICT produced by entities controlled
by a foreign adversary that could create a risk of sabotage or catastrophic effects on critical
infrastructure, and declaring a national emergency in regard to this threat.6 While the executive
order does not mention Huawei specifical y, it directs the Department of Commerce (DOC) to
identify technologies or countries that may warrant particular scrutiny and establish procedures to
license transactions to mitigate concerns.
On May 21, 2019, in response to the criminal charges, DOC added Huawei and 68 of its affiliates
to the Entity List—a trade restriction list published by DOC’s Bureau of Industry and Security
(BIS).7 In its announcement, DOC stated that it reasonably believes the company to be involved

1 See CRS Report R46693, Huawei and U.S. Law, by Stephen P. Mulligan and Chris D. Linebaugh.
2 Senator Mark R. Warner, “Warner, Rubio Announce Growing Bipartisan Support to Combat T echnology T hreats
from China,” press release, January 29, 2019, at https://www.warner.senate.gov/public/index.cfm/2019/1/warner-rubio-
announce-growing-bipartisan-support -to-combat-technology-threats-from-china.
3 U.S. Congress, House Permanent Select Committee on Intelligence, Investigative Report on the U.S. National
Security Issues Posed by Chinese Telecom m unications Com panies Huawei and ZTE , 112th Cong., 2nd sess., October 8,
2012, pp. 27-29, at https://intelligence.house.gov/news/documentsingle.aspx?DocumentID=96. See also Robert D.
Atkinson, “How China’s Mercantilist Policies Have Undermined Global Innovation in the T elecom Equipment
Industry,” Information Technology and Innovation Foundation, June 22, 2020, at https://itif.org/sites/default/files/
2020-china-mercantilist-telecom-equipment-industry.pdf.
4 For example, see P.L. 116-124 and S. 604.
5 DOJ, “Chinese T elecommunications Conglomerate Huawei and Huawei CFO Wanzhou Meng Charged with
Financial Fraud,” press release, January 28, 2019, at https://www.justice.gov/opa/pr/chinese-telecommunications-
conglomerate-huawei-and-huawei-cfo-wanzhou-meng-charged-financial.
6 Executive Order 13873, “Securing the Information and Communications T echnology and Services Supply Chain,” 84
Federal Register 22689, May 15, 2019.
7 BIS administers Export Administration Regulations (EAR), export controls on commercial, dual-use, and less
sensitive military items (15 C.F.R., subchapter C, parts 730–774). U.S. firms must obtain a license to export EAR items
to Entity List organizations. See CRS In Focus IF11627, U.S. Export Control Reform s and China: Issues for Congress,
by Ian F. Fergusson and Karen M. Sutter.
Congressional Research Service

1

U.S. Restrictions on Huawei Technologies

in activities contrary to the national security or foreign policy interest of the United States.8 DOC,
as the agency responsible for governing the export and re-export of certain commodities,9
including technology and software, administers the Export Administration Regulations (EAR).
The EAR impose licensing requirements on exports of certain products, buyers, and end
destinations,10 and DOC general y limits the availability of licenses for exports involving people
or organizations on the Entity List.11 On May 22, 2019, DOC created a Temporary General
License (TGL) al owing some transactions to continue for 90 days, including operations of
current networks, (e.g., software patches), support to existing devices, cybersecurity research and
disclosure to Huawei of security vulnerabilities, and engagement in 5G standards development
bodies.12 From May 2019 through August 2020, DOC amended its rules, tightening restrictions
on exports to Huawei, and extending the TGL several times.
In February 2020, DOJ charged Huawei with racketeering and theft of trade secrets, among other
things.13 In March 2020, Congress prohibited entities from using federal subsidies to purchase
telecommunications equipment that poses a national security threat, which includes Huawei
equipment, created a program to “rip and replace” untrusted equipment in U.S. networks (P.L.
116-124), and later appropriated $1.9 bil ion for the program (P.L. 116-260, §901). In May 2020,
DOC amended its rules, imposing additional controls over certain foreign-produced items.14 The
rule applies specifical y to Huawei and its listed non-U.S. affiliates, and intends to “restrict
Huawei’s ability to use U.S. technology and software to design and manufacture its
semiconductors abroad.”15 In August 2020, DOC added several Huawei affiliates to the Entity
List, discontinued the TGL, and tightened restrictions on use of U.S. technologies and software
for foreign-made products manufactured for Huawei or its listed affiliates.16

8 BIS, “Addition of Entities to the Entity List,” 84 Federal Register 22961, May 21, 2019. (Note: DOC’s End User
Review Committee (ERC), composed of representatives of the Departments of Commerce, State, Defense, Energy, and,
where appropriate, the T reasury, makes determinations to place entities on the Entity List.)
9 See 15 C.F.R. §734.3, “Items Subject to Export Administration Regulations.”
10 International T rade Administration, “U.S. Export Regulations,” at https://www.trade.gov/us-export-regulations-0.
11 15 C.F.R. subchapter C, parts 730-774.
12 DOC, “T emporary General License,” 84 Federal Register 23468-23471, May 22, 2019.
13 DOJ, “Chinese T elecommunications Conglomerate Huawei and Subsidiaries Charged in Racketeering Conspiracy
and Conspiracy to Steal T rade Secrets,” press release, February 13, 2020, at https://www.justice.gov/opa/pr/chinese-
telecommunications-conglomerate-huawei-and-subsidiaries-charged-racketeering.
14 DOC, “Export Administration Regulations: Amendments to General Prohibition T hree (Foreign -Produced Direct
Product Rule) and the Entity List,” 85 Federal Register 29849-29863, May 19, 2020.
15 DOC, “Commerce Addresses Huawei’s Efforts to Undermine Entity List, Restricts Products Designed and Produced
with U.S. T echnologies,” press release, May 15, 2020, at https://2017-2021.commerce.gov/news/press-releases/2020/
05/commerce-addresses-huaweis-efforts-undermine-entity-list-restricts.html.
16 BIS, “Addition of Huawei Non-U.S. Affiliates to the Entity List, the Removal of T emporary General License, and
Amendments to General Prohibition T hree (Foreign -Produced Direct Product Rule),” 85 Federal Register 51602,
August 20, 2020. (Specifically, the rule applies to “ foreign-produced items that are: the direct product of certain U.S.
technology or software or produced by any plant or major component of a plant that is located outside the United
States, when the plant or major component of a plant itself is a direct product of certain U.S.-origin technology or
software; when the foreign-produced item will be incorporated into, or will be used in the ‘production’ or
‘development’ of any ‘part,’ ‘component,’ or ‘equipment’ produced, purchased, or ordered by Huawei or its listed non-
U.S. affiliates; or Huawei or its listed non-U.S. affiliates is a party to any transaction involving the foreign -produced
item, e.g., as a ‘purchaser,’ ‘intermediate consignee,’ ‘ultimate consignee,’ or ‘end-user.’” DOC cites the Export
Control Reform Act of 2018 (ECRA), 50 U.S.C. Sections 4801 -4852 as the legal basis for BIS’s authority under which
BIS issues this rule.)
Congressional Research Service

2

U.S. Restrictions on Huawei Technologies

While DOC permitted some transactions under the TGL, it imposed a license requirement for the
export of other items to Huawei and its affiliates, including 5G technologies.17 DOC adopted a
“presumption of denial” policy, meaning DOC was unlikely to approve license requests.
The Biden Administration has upheld the policies of the Trump Administration, keeping Huawei
on the Entity List and enforcing restrictions on 5G technologies. However, both Administrations
approved some licenses, permitting some exports of U.S. products to Huawei—decisions that
some lawmakers questioned.18 In October 2021, the House Foreign Affairs Committee released
data from DOC stating that from November 9, 2020, to April 20, 2021, DOC approved licenses
authorizing at least $61 bil ion in exports of technology to Huawei.19 In August 2021, DOC
approved licenses authorizing exports of chips to Huawei for in-vehicle technologies, such as
video screens and sensors, asserting that the chips are less sophisticated and pose less of a threat
to U.S. foreign policy interests than more advanced 5G-capable chips.20
In November 2021, Congress acted to further restrict Huawei equipment use in the United States.
Congress passed, and the President signed, legislation requiring the Federal Communications
Commission (FCC) to adopt rules clarifying it would not authorize use of certain “covered”
equipment in the United States,21 which includes Huawei equipment (P.L. 117-55). Other
legislative proposals would require DOC to certify a company is not involved in activities
contrary to U.S. national security or foreign policy interests before removing it from the Entity
List (S. 568 and H.R. 4561). H.R. 1595 includes a similar certification, adds certain Huawei
affiliates to the Entity List, and requires DOC to report on export license applications.
Other legislative proposals focus less on restrictions and more on bolstering the U.S.
telecommunications industry to help ensure the United States stays competitive in the global
technology market. S. 1260 would provide funding to strengthen the U.S. semiconductor industry,
and support advanced telecommunications technology research and alternatives to Huawei (e.g.,
Open Radio Access Network or ORAN technology development).
Stil other legislation focuses on promoting the use of secure and trusted telecommunications
equipment global y. S. 604 would build international partnerships among democratic nations to
promote legal compatibility and democratic values in technology governance, to “avoid ceding
leadership to authoritarian regimes and risking the growth of anti-democratic norms and standards
around technologies,” and promote coordination in investments to protect global networks. H.R.

17 For example, see DOC, “Export Administration Regulations: Amendments to General Prohibition T hree (Foreign -
Produced Direct Product Rule) and the Entity List,” 85 Federal Register 29849-29863, May 19, 2020 (imposing a
control on certain “ technology” or “ software,” including millimeter wave or 5G technologies).
18 Michael Ruiz, “Republican Lawmakers Raise Flags over Report Biden Administration Greenlit Chip Sales to
Huawei,” Fox Business, August 26, 2021, at https://www.foxbusiness.com/politics/republicans-biden-chip-sales-
huawei.
19 “Export Control Licensing Decisions for Huawei (November 9, 2020 -April 20, 2021),” data obtained by the House
Foreign Affairs Committee from the Department of Commerce, released by the committee on October 21, 2021,
available at https://gop-foreignaffairs.house.gov/wp-content/uploads/2021/10/Huawei-Licensing-Information.pdf.
20 Karen Freifeld, “EXCLUSIVE: Huawei Get U.S. Approvals to Buy Auto Chips, Sparking Blow Back,” Reuters,
August 25, 2021, at https://www.reuters.com/business/autos-transportation/exclusive-us-approves-licenses-huawei-
buy-auto-chips-sources-2021-08-25/.
21 P.L. 117-55 states the FCC will no longer review applications for equipment that is on the list of “covered”
communications equipment or services published by the FCC as directed under Section 2(a) of the Secure and T rusted
Communications Networks Act of 2019 (47 U.S.C. 1601(a)). As directed in the act, the FCC published a list of covered
equipment on March 12, 2021; see https://www.fcc.gov/supplychain/coveredlist .
Congressional Research Service

3

U.S. Restrictions on Huawei Technologies

3344 would provide project support and financing to certain Central and Eastern European
nations to provide cost-effective alternatives to Huawei, and to improve global network security.
This report provides an overview of the global telecommunications market, a discussion of
existing U.S. restrictions on Huawei, benefits and chal enges in implementing restrictions, and
considerations for Congress as it contemplates future policies concerning Huawei.
Global Telecommunications Networks and
Equipment Market
This section provides brief background on network operators and ownership models in the United
States and China, and on global network equipment manufacturers and their suppliers.
Network Operators and Ownership in the United States and China
In the United States, private-sector companies, such as AT&T, T-Mobile, Verizon, and many
smal er telecommunications service providers, own and operate22 telecommunications networks.23
Network operators invest in their networks to improve coverage and service, retain existing
customers, attract new customers, and increase revenue for the company and its shareholders.24
The U.S. government provides some subsidies for network operators serving high-cost areas
through its Universal Service Fund (USF),25 and funding through federal grant programs,26 to
help ensure telecommunications services are available and affordable throughout the country.27
In China, the “Big Three” telecommunications network operators—China Mobile, China
Telecom, and China Unicom—are state-owned enterprises.28 The State-owned Assets Supervision

22 One exception in the United States is FirstNet, the nationwide public safety network, funded with federal dollars,
managed by the First Responder Network Authority, a government entity, and built by AT &T . See
https://www.firstnet.gov/.
23 Prior to 1984, the U.S. government recognized AT &T as a natural monopoly providing a public good; in turn, the
U.S. government limited AT &T ’s rate-of-return (i.e., its profits). In 1984, in a DOJ antitrust suit, a U.S. District Court
ordered AT &T to divest itself of subsidiaries—the Bell Operating Companies—providing local telephone service. T he
Bell Operating Companies were broken up into seven regional companies that would provide local service to ensure
competition in the market. See Isaac J. T urk and Sabrina L. Montes, The U.S. Telecom m unications Services Industry,
Economics and Statistics Administration, August 1995, p. 11, at https://www.commerce.gov/sites/default/files/media/
files/2018/the_u.s._ telecommunications_services_industry_assessing_competitive_advantage.pdf.
24 Norbert Michel and James Gattuso, Are U.S. Telecom Networks Public Property?, T he Heritage Foundation, April 8,
2004, at https://www.heritage.org/technology/report/are-us-telecom-networks-public-property.
25 High-cost areas may be rural or remote areas where customers are limited and deployment costs are high. See CRS
Report R46613, The Digital Divide: What Is It, Where Is It, and Federal Assistance Program s, by Colby Leigh
Rachfal.
26 See Jon Swartz, “How the Infrastructure Bill’s $65 Billion in Broadband Spending Will Be Doled Out,” Market
Watch, November 9, 2021 (discussing funding available through the Infrastructure Investment and Jobs Act ( P.L. 117-
58)).
27 CRS Report R46780, Overview of the Universal Service Fund and Selected Federal Broadband Programs,
coordinated by Patricia Moloney Figliola.
28 Like the United States, the Chinese government relied on a single provider that had a monopoly on telecom services
in China. In 1999, t he government broke up the monopoly and created smaller, state-owned enterprises (SOEs) to spur
competition. In 2008, the Chinese government reversed course and consolidated the carriers, forming three SOEs:
China Mobile, China T elecom, and China Unicom. See U.S. Congress, Senate Committee on Homeland Security and
Governmental Affairs, Permanent Subcommittee on Investigations, Threats to U.S. Networks: Oversight of Chinese
Governm ent-Owned Carriers, Staff Report, 116th Cong., 2nd sess., June 2020, pp. 20-21, at
Congressional Research Service

4

U.S. Restrictions on Huawei Technologies

and Administration Commission of the State Council, a government entity, holds a majority of the
shares in and supervises Big Three operations.29 The government selects the companies’ leaders,
many of which have “links to the [Ministry of Information Industry and Technology], the
Government, or the [Communist] Party.”30 The Chinese government establishes target returns and
growth rates,31 and sets industry goals that align with Chinese national goals.32 Further, Chinese
law requires domestic and foreign companies operating in China to create a Communist Party of
China Committee within each company to promote national and “social responsibility” goals.33
Chinese operators continual y upgrade their networks to improve coverage and service, retain
customers, attract new customers, and increase revenue.34 However, as state-owned entities, they
operate within a tightly controlled and closed domestic telecommunications market (one of the
largest telecommunications markets in the world, in terms of subscribers),35 and are compel ed to
support government goals such as “lower prices, higher speed and better coverage,” at times
ahead of growth and revenues.36
Global Network Equipment Manufacturers and Suppliers
To improve networks, operators purchase equipment from network equipment manufacturers.
There are four major global network equipment makers: Chinese firm Huawei; Finnish firm
Nokia; Swedish firm Ericsson; and Zhong Xing Telecommunication Equipment (ZTE), a Chinese
firm that is partial y state-owned. Huawei is the world’s largest network equipment maker, based
on estimates from the Del ’Oro Group, a telecom analysis firm. In first half of 2021, Huawei held
about 30% of the $90 bil ion global network equipment market, Nokia and Ericsson each held
about 15%, and ZTE held about 10%, according to Del ’Oro.37

https://www.hsgac.senate.gov/imo/media/doc/2020-06-09%20PSI%20Staff%20Report%20-
%20T hreats%20to%20U.S.%20Communications%20Networks.pdf.
29 FCC, In the Matter of China Unicom (Americas) Operations Limited (DA-20-449), Order to Show Cause, April 24,
2020, pp. 3722-3723, at https://www.fcc.gov/document/china-unicom-americas-operations-limited-order-show-cause.
30 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on
Investigations, Threats to U.S. Networks: Oversight of Chinese Governm ent-Owned Carriers, Staff Report, 116th
Cong., 2nd sess., June 2020, p. 20, at https://www.hsgac.senate.gov/imo/media/doc/2020-06-
09%20PSI%20Staff%20Report%20-%20Threats%20to%20U.S.%20Communications%20Networks.pdf .
31 U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on
Investigations, Threats to U.S. Networks: Oversight of Chinese Governm ent-Owned Carriers, Staff Report, 116th
Cong., 2nd sess., June 2020, p. 2, at https://www.hsgac.senate.gov/imo/media/doc/2020-06-
09%20PSI%20Staff%20Report%20-%20Threats%20to%20U.S.%20Communications%20Networks.pdf.
32 CRS In Focus IF10964, “Made in China 2025” Industrial Policies: Issues for Congress, by Karen M. Sutter.
33 See, for example, China Unicom, China Unicom Corporate Social Responsibility Report 2015, p. 5, at
https://www.unglobalcompact.org/participation/report/cop/create-and-submit/active/224671.
34 U.S. Chamber of Commerce, Made in China 2025: Global Ambitions Built on Local Protections, 2017, p. 19, at
https://www.uschamber.com/sites/default/files/final_made_in_china_2025_report_full.pdf.
35 Robert D. Atkinson, “How China’s Mercantilist Policies Have Undermined Global Innovation in the T elecom
Equipment Industry,” Information Technology and Innovation Foundation, June 22, 2020, at https://itif.org/sites/
default/files/2020-china-mercantilist -telecom-equipment -industry.pdf. See also Daniel Slotta, “ T elecommunications
Industry in China—Statistics and Fact s,” Statista, April 21, 2021, at https://www.statista.com/topics/6577/
telecommunications-industry-in-china/#dossierKeyfigures.
36 Bien Perez, “Why Government Policy Has a Bigger Impact on China’s T elecoms Industry T han Market
Competition,” South China Morning Post, March 11, 2017, at https://www.scmp.com/tech/china-tech/article/2077810/
why-government -policy-has-bigger-impact -chinas-telecoms-industry.
37 Stefan Pongratz, “Key T akeaways—1Q 2021 T otal T elecom Equipment Market ,” Dell’Oro Group, June 15, 2021, at
https://www.delloro.com/key-takeaways-total-telecom-equipment -market-2020/. See also Matt Kapko, “ Ericsson,
Congressional Research Service

5

U.S. Restrictions on Huawei Technologies

Network equipment makers develop and deploy end-to-end network solutions for network
operators (e.g., design, instal ation, integration of hardware and software). While the United
States does not have a major network equipment manufacturer that provides end-to-end network
solutions, it has many companies that supply these major manufacturers with essential parts (e.g.,
chips, software, switches, and other hardware).38 For example, in 2018, Huawei announced that
33 of its top 92 suppliers were U.S. firms,39 and in 2019 said it had purchased about $11 bil ion in
supplies from U.S. companies in the past year.40
With the emergence of 5G technologies, industry analysts expect the equipment market to grow
as network operators around the world upgrade networks. The Del ’Oro Group predicted the $90
bil ion equipment market to grow by 5% to 10% in 2021.41 Analysts expect operators to upgrade
to 5G, and network equipment manufacturers and their suppliers, including U.S. firms, to benefit
from increased 5G spending.
Background on Huawei and U.S. Concerns with
Huawei
Since 2000, the U.S. government has raised concerns about Huawei, citing its ties to the Chinese
government and military, sanction violations, theft of intel ectual property, and other offenses.42
This section provides background on Huawei, and U.S. government concerns with Huawei.
Huawei Technologies Co., Ltd.
In 1986, the Chinese government initiated plans to improve its telecommunications infrastructure
to develop its economy.43 The government adopted a three-pronged policy to build its national
telecommunications network, “including: (a) direct import of equipment; (b) technological
transfer and absorbing; and (c) indigenous innovation with the hope that the Chinese homegrown
firms would eventual y catch up with multinational giants.” 44 The government reduced tariffs on

Cisco, Samsung Gain T elco Gear Share as Huawei, Nokia Suffer Losses,” sdxcentral, September 13, 2021, at
https://www.sdxcentral.com/articles/news/ericsson-cisco-samsung-gain-telco-gear-share-as-huawei-nokia-suffer-losses/
2021/09/.
38 Sijia Jiang and Michael Martina, “Huawei’s $105 Billion Business at Stake Aft er U.S. Broadside,” Reuters, May 16,
2019, at https://www.reuters.com/article/us-usa-trade-china-huawei-analysis/huaweis-105-billion-business-at-stake-
after-u-s-broadside-idUSKCN1SM123.
39 “Investment Intelligence: Huawei’s 92 Core Suppliers T ake Stock (source: China Business Industry Research
Institute),” November 30, 2018, at http://finance.eastmoney.com/a/20181130996862142.html.
40 Sherisse Pham, “Losing Huawei as a Customer Could Cost U.S. T ech Companies $11 Billion,” CNN Business, May
17, 2019, at https://www.cnn.com/2019/05/17/tech/huawei-us-ban-suppliers/index.html.
41 Stefan Pongratz, “Key T akeaways—1H 2021 T otal T elecom Equipment Market ,” Dell’Oro Group, September 13,
2021, at https://www.delloro.com/key-takeaways-1h21-total-telecom-equipment-market/.
42 CRS Report R46693, Huawei and U.S. Law, by Stephen P. Mulligan and Chris D. Linebaugh.
43 Eric Harwit, “Building China’s T elecommunications Network: Industrial Policy and the Role of Chinese State-
Owned, Foreign, and Private Domestic Enterprises,” The China Quarterly, June 2007, p. 317, at https://www.jstor.org/
stable/pdf/20192772.pdf.
44 Yun Wen, “T he Rise of Chinese T ransnational ICT Corporations” (Dissertation, Simon Fraser University, 2017), pp.
66-67, at https://core.ac.uk/download/pdf/132453592.pdf.
Congressional Research Service

6

U.S. Restrictions on Huawei Technologies

imported telecommunications products,45 supported joint ventures between domestic and foreign
firms,46 including U.S. firms,47 and permitted private ownership of high-technology businesses.48
Ren Zhengfei, an engineer who served in the People’s Liberation Army (PLA) Engineering
Corps, started Huawei Technologies Co., Ltd. (Huawei) in 1987 as a private enterprise.49 Initial y,
Huawei sold imported telephone switches.50 By 1990, Huawei began making its own switches,
and in 1993 released the C&C08, the most advanced digital switch in China at the time.51
While Huawei asserts its research and development (R&D) investments led to the invention of the
switch, some researchers assert that the Chinese government assisted in its development.
Specifical y, a consortium of Chinese government agencies shared with domestic firms
knowledge gained from joint ventures—business partnerships between Chinese and foreign firms
that required foreign firms to transfer knowledge in exchange for access to the market—including
knowledge of advanced switches.52 Researchers say the shared knowledge helped domestic firms,
including Huawei, “catch up” to foreign competitors.53 The C&C08 gained the attention of the
PLA, which contracted with Huawei to supply its telecommunications network.54 The proceeds
al owed Huawei to increase its R&D investments, develop new technologies, and expand in
China,55 with the support and protection of the Chinese government.56
In 1996, the Chinese government adopted policies to promote the development of domestic
telecommunications technologies to counter the expansion of foreign firms in the Chinese
telecommunications market, and to ensure security of Chinese networks.57 It ended special import

45 Eric Harwit, “Building China’s T elecommunications Network: Industrial Policy and the Role of Chinese State-
Owned, Foreign, and Private Domestic Enterprises,” The China Quarterly, June 2007, p. 317, at https://www.jstor.org/
stable/pdf/20192772.pdf.
46 Ibid., pp. 318-321. (Discussing how foreign firms seeking to do business in China were required to form joint
ventures with a local partner. T he Chinese government required foreign firms to share their technologies and
knowledge with Chinese firms to build indigenous capabilities.)
47 Firms, including Lucent, Intel, AT &T , Motorola, and IBM, were eager to enter the Chinese market, but also
recognized the risks of joint ventures—specifically, that Huawei could gain insight into their technologies and business
strategies and compete with them in the future. See Bruce Gilley, “ Huawei’s Fixed Line to Beijing,” Far Eastern
Econom ic Review, December 28, 2000, p. 95, at https://web.pdx.edu/~gilleyb/Huawei_FEER28Dec2000.pdf.
48 Yun Wen, “T he Rise of Chinese T ransnational ICT Corporations” (Dissertation, Simon Fraser University, 2017), p.
64, at https://core.ac.uk/download/pdf/132453592.pdf.
49 Huawei Investment and Holding Co., Ltd., 2020 Annual Report, March 2021, at https://www-file.huawei.com/
minisite/media/annual_report/annual_report_2020_en.pdf.
50 Switches are devices that enable the transmission (i.e., routing) of voice and data across telephone networks to
facilitate communications between subscribers.
51 Nathaniel Ahrens, China’s Competitiveness: Myth, Reality, and Lessons for the United States and Japan , Center for
Strategic and International Studies, February 2013, pp. 3 -4, at https://csis-website-prod.s3.amazonaws.com/s3fs-public/
legacy_files/files/publication/130215_competitiveness_Huawei_casestudy_Web.pdf.
52 Qing Mu and Keun Lee, “Knowledge diffusion, market segmentation and technological catch-up: T he case of the
telecommunication industry in China,” Research Policy, August 2005, p. 775, at https://www.sciencedirect.com/
science/article/abs/pii/S0048733305000946?via%3Dihub.
53 Ibid., p. 779.
54 Nathaniel Ahrens, China’s Competitiveness: Myth, Reality, and Lessons for the United States and Japan, Center for
Strategic and International Studies, February 2013, pp. 3 -4, at https://csis-website-prod.s3.amazonaws.com/s3fs-public/
legacy_files/files/publication/130215_competitiveness_Huawei_casestudy_Web.pdf.
55 Ibid.
56 See Bruce Gilley, “Huawei’s Fixed Line to Beijing,” Far Eastern Economic Review, December 28, 2000, p. 95, at
https://web.pdx.edu/~gilleyb/Huawei_FEER28Dec2000.pdf.
57 Eric Harwit, “Building China’s T elecommunications Network: Industrial Policy and the Role of Chinese State-
Congressional Research Service

7

U.S. Restrictions on Huawei Technologies

policies for telecommunications products, moved away from using foreign technologies in its
networks, and adopted policies favoring domestic technology firms.58 The government identified
certain Chinese firms, including Huawei, as “national champions”—firms that could help it build
a domestic telecommunications industry.59 National champions, including Huawei, received
preferential policy treatment, access to low-cost financing, R&D funding, and tax benefits.60
In 1998, the Chinese government established a “buy local” policy,61 and offered domestic firms,
including Huawei, access to low-cost loans and low-cost financing for their customers.62 A
number of researchers and journalists have attributed Huawei’s rise in the telecommunications
equipment industry to this support from the Chinese government.63 Research in 1998 indicates
“the Beijing headquarters of China Construction Bank lent Huawei [about $600 mil ion] in
buyer’s credit, representing 45% of the total such credit it extended that year.”64 Chinese
government financing al owed Huawei to offer low-cost equipment and financing to customers,
win contracts, and gain market share in China. For example, Huawei’s share of the Chinese
switch market was about 20% in 199665 and grew to 42% in 2004, which scholars attribute to
strong government support.66
With revenues it earned from the Chinese market, Huawei expanded global y. By the end of 2001,
Huawei had established offices in 45 countries,67 including the United States.68 In the first quarter

Owned, Foreign, and Private Domestic Enterprises,” The China Quarterly, June 2007, p. 327, at https://www.jstor.org/
stable/pdf/20192772.pdf.
58 Nathaniel Ahrens, China’s Competitiveness: Myth, Reality, and Lessons for the United States and Japan, Center for
Strategic and International Studies, February 2013, p. 27, at https://csis-website-prod.s3.amazonaws.com/s3fs-public/
legacy_files/files/publication/130215_competitiveness_Huawei_casestudy_Web.pdf.
59 Lindsay Maizland and Andrew Chatzky, Huawei: China’s Controversial Tech Giant, Council on Foreign Relations,
August 6, 2020, at https://www.cfr.org/backgrounder/huawei-chinas-controversial-tech-giant.
60 Chuin-Wei Yap, “State Support Helped Fuel Huawei’s Global Rise,” Wall Street Journal, December 25, 2019, at
https://www.wsj.com/articles/state-support -helped-fuel-huaweis-global-rise-11577280736.
61 Eric Harwit, “Building China’s T elecommunications Network: Industrial Policy and the Role of Chinese State-
Owned, Foreign, and Private Domestic Enterprises,” The China Quarterly, June 2007, p. 327, at https://www.jstor.org/
stable/pdf/20192772.pdf.
62 Alex Rubin, Alan Omar Loera Martinez, and Jake Dow, et al., The Huawei Moment, Center for Security and
Emerging T echnology, June 2021, p. 32, at https://cset.georgetown.edu/publication/the-huawei-moment/.
63 Bruce Gilley, “Huawei’s Fixed Line to Beijing,” Far Eastern Economic Review, December 28, 2000, p. 96, at
https://web.pdx.edu/~gilleyb/Huawei_FEER28Dec2000.pdf; Chuin-Wei Yap, “ State Support Helped Fuel Huawei’s
Global Rise,” Wall Street Journal, December 25, 2019, at https://www.wsj.com/articles/state-support-helped-fuel-
huaweis-global-rise-11577280736; Robert D. Atkinson, “ How China’s Mercantilist Policies Have Undermined Global
Innovation in the T elecom Equipment Industry,” Information Technology and Innovation Foundation, June 22, 2020, at
https://itif.org/sites/default/files/2020-china-mercantilist -telecom-equipment-industry.pdf; and Alex Rubin, Alan Omar
Loera Martinez, and Jake Dow, et al., The Huawei Mom ent, Center for Security and Emerging T echnology, June 2021,
p. 32, at https://cset.georgetown.edu/publication/the-huawei-moment/.
64 Bruce Gilley, “Huawei’s Fixed Line to Beijing,” Far Eastern Economic Review, December 28, 2000, p. 96, at
https://web.pdx.edu/~gilleyb/Huawei_FEER28Dec2000.pdf.
65 Eric Harwit, “Building China’s T elecommunications Network: Industrial Policy and the Role of Chinese State-
Owned, Foreign, and Private Domestic Enterprises,” The China Quarterly, June 2007, p. 329, at https://www.jstor.org/
stable/pdf/20192772.pdf.
66 Eric Harwit, “T elecommunications and the Internet in Shanghai: Political and Economic Factors,” Urban Studies,
vol. 42, no. 10 (September 2005), p. 1849, at https://www.jstor.org/stable/pdf/43197202.pdf.
67 Evan S. Medeiros, Roger Cliff, and Keith Crane, et al., A New Direction for China’s Defense Industry (RAND
Corporation, 2005), p. 219, at https://www.rand.org/content/dam/rand/pubs/monographs/2005/RAND_MG334.pdf.
68 Dan Steinbock, “T he Case for Huawei in America (a report prepared for Huawei),” July 15, 2012, p. 12, at
https://huawei.mediaroom.com/download/20120904+Case+for+Huawei+in+America-Huawei+%28ds%29.pdf.
Congressional Research Service

8

U.S. Restrictions on Huawei Technologies

of 2009, analysts reported Huawei doubled its share of the global network equipment market to
15%, surpassing Alcatel-Lucent (14%) and coming in third behind Ericsson (33%) and Nokia-
Siemens (21%).69 By the end of 2009, Huawei surpassed Nokia in revenue to become the second-
largest equipment maker in the world.70 In 2012, it surpassed Ericsson to become the largest.71
Huawei asserts it was able to expand global y due to investments in R&D, improved products,
low pricing, and customized service—an assertion supported by some carriers.72 However, many
analysts attribute some of Huawei’s growth to Chinese government assistance.
Researchers at the Institute of Developing Economies, a Japanese research center affiliated with
the Japan External Trade Organization, which conducts economic studies on developing regions,
attributes Huawei’s growth to state-supported financing. According to its research, in 2004, the
China Development Bank (CDB) provided Huawei a credit line of $10 bil ion, and the Export-
Import Bank of China gave an additional $600 mil ion to expand global y.73 Researchers at the
Center for American Progress, a U.S.-based public policy institute, assert Huawei “owes its rise to
Chinese industrial policies that have suppressed global competition for nearly two decades,” and
to state-supported financing.74 According to its research, the CDB provided an additional $30
bil ion in 2009 for Huawei’s expansion global y.75 Scholars at the Center for Strategic and
International Studies (CSIS), a Washington, DC, public policy research center, found Huawei
“slashed prices wel below that of its competitors, purportedly sometimes by as much as 70
percent, and provided vendor-financed loans to their customers” to win global market share.76
Some analysts attribute Huawei’s growth to questionable trade practices, including forced
technology transfer.77 According to a July 2021 report by the Center for Security and Emerging
Technology (CSET) at Georgetown University, “Huawei has also benefitted during its rise from
the business environment fostered by Beijing that normalized technology transfer from foreign
firms.”78 In addition to forced technology transfer, CSET also notes legal chal enges by

69 “Huawei Passes Alca-Lu in Mobile Vendor Rankings,” Fierce Wireless, March 24, 2009, at
https://www.fiercewireless.com/europe/huawei-passes-alca-lu-mobile-vendor-rankings.
70 T armo Virki, “UPDAT E 1-China’s Huawei T akes No. 2 Spot in Mobile Gear,” Reuters, November 13, 2009, at
https://www.reuters.com/article/telecom-gear/update-1-chinas-huawei-takes-no-2-spot-in-mobile-gear-
idUSLD56804020091113.
71 Cyrus Lee, “Huawei Surpasses Ericsson as World’s Largest T elecom Equipment Vendor,” ZDNet, July 25, 2012, at
https://www.zdnet.com/article/huawei-surpasses-ericsson-as-worlds-largest -telecom-equipment -vendor/.
72 Reply Comments of the Rural Wireless Association to the Federal Communication Commission (FCC) Public
Notice, In the Matter of Protecting Against National Security Threats to the Com m unications Supply Chain Through
FCC Program s (WC Docket No. 18-89), December 7, 2018, p. 15.
73 Institute of Developing Economies, China in Africa, Chapter 11, “T he Role of China’s Financial Institutions,”
October 2009, p. 77, at https://www.ide.go.jp/English/Data/Africa_file/Manualreport/cia_11.html.https://
www.ide.go.jp/ English/Data/Africa_file/Manualreport/cia_11.html.
74 Melanie Hart and Jordan Link, “T here Is a Solution to the Huawei Challenge,” Center for American Progress,
October 14, 2020, at https://www.americanprogress.org/issues/security/reports/2020/10/14/491476/solution-huawei-
challenge/.
75 Ibid. T able 1 provides a list of Huawei global equipment deals funded with Chinese state bank export financing.
76 Nathaniel Ahrens, China’s Competitiveness: Myth, Reality, and Lessons for the United States and Japan , Center for
Strategic and International Studies, February 2013, p. 10, at https://csis-website-prod.s3.amazonaws.com/s3fs-public/
legacy_files/files/publication/130215_competitiveness_Huawei_casestudy_Web.pdf.
77 Generally, when a government forces foreign businesses to share their technology in exchange for market access.
78 Alex Rubin, Alan Omar Loera Martinez, and Jake Dow, et al., The Huawei Moment, Center for Security and
Emerging T echnology, June 2021, p. 34, at https://cset.georgetown.edu/publication/the-huawei-moment/.
Congressional Research Service

9

U.S. Restrictions on Huawei Technologies

competitors, including U.S. firms Cisco Systems in 2003 and T-Mobile in 2014, accusing Huawei
of theft of intel ectual property.79
A June 2020 report by the Information Technology and Innovation Foundation (ITIF), a
Washington, DC, think tank, attributes Huawei’s rise in the global market to “mercantilist
Chinese government policies.”80 ITIF analysts assert Chinese government policies forced
technology transfer from foreign firms through joint ventures, restricted foreign access to the
Chinese market, incentivized purchase of domestic products, guaranteed domestic market share to
Chinese firms, and provided low-cost government financing that al owed Huawei to undercut
competitor pricing and contributed to its growth. Stil other researchers say that Huawei’s success
in the highly competitive global telecommunications market likely required “both high
entrepreneurial achievements as wel as state support.”81
A key concern of the U.S. government centers on Huawei’s growing presence in global networks
and the potential risk of espionage or sabotage by the Chinese government, using Huawei
equipment. Huawei asserts that it is the most scrutinized technology company in the world and
that since its founding in 1987, “not one of Huawei’s customers has ever experienced a major
cybersecurity breach.”82 Nonetheless, some security experts caution that there is a possibility that
the Chinese government could exploit a hidden vulnerability and al ow theft of U.S. national
security information, personal information, or intel ectual property from U.S. businesses.83
U.S. Government Concerns with Huawei
Huawei first attracted U.S. government attention in the early 2000s, when United Nations (UN)
observers accused it of violating sanctions by providing fiber-optic technology and switching
equipment to Iraq.84 The Chinese government applied to a UN sanctions committee in 1999 for
approval for Huawei to supply Baghdad with telecommunications technologies. DOD raised
concern that Iraq could use the technologies for military purposes; in response, the United States
and United Kingdom placed holds on the contracts.85

79 T he U.S. Department of Justice would later accuse Huawei of theft of intellectual property of six U.S. companies.
See DOJ, “Chinese T elecommunications Conglomerate Huawei and Subsidiaries Charged in Racketeering Conspiracy
and Conspiracy to Steal T rade Secrets,” press release, February 13, 2020, at https://www.justice.gov/opa/pr/chinese-
telecommunications-conglomerate-huawei-and-subsidiaries-charged-racketeering; see also Chuin-Wei Yap, Dan
Strumpf, and Dustin Volz, et al., “Huawei’s Yearslong Rise Is Littered with Accusations of T heft and Dubious Ethics,”
Wall Street Journal, May 25, 2019, at https://www.wsj.com/articles/huaweis-yearslong-rise-is-littered-with-
accusations-of-theft-and-dubious-ethics-11558756858.
80 Robert D. Atkinson, “How China’s Mercantilist Policies Have Undermined Global Innovation in the T elecom
Equipment Industry,” Information T echnology and Innovation Foundation, June 22, 2020 , at https://itif.org/sites/
default/files/2020-china-mercantilist -telecom-equipment -industry.pdf.
81 Peter Nolan, China and the Global Business Revolution (London: Palgrave McMillan, 2001), p. 863.
82 Huawei, “ 5G Security. Huawei: Facts, Not Myths,” Voice of Huawei (blog), December 17, 2019, at
https://www.huawei.com/en/facts/voices-of-huawei/5g-security.
83 U.S. Department of State, “Huawei and Its Siblings, the Chinese T ech Giants: National Security and Foreign Policy
Implications,” Remarks by Dr. Christopher Ashley Ford, Assistant Secretary, Bureau of International Se curity and
Nonproliferation, Multilateral Action on Sensitive T echnologies Conference, September 11, 2019, at https://2017-
2021.state.gov/huawei-and-its-siblings-the-chinese-tech-giants-national-security-and-foreign-policy-implications/
index.html.
84 U.S.-China Economic and Security Review Commission, 2002 Report to Congress of the U.S.-China Security
Review Com m ission, July 2002, p. 139, at https://www.uscc.gov/sites/default/files/annual_reports/
2002%20Annual%20Report%20to%20Congress.pdf .
85 Colum Lynch, “Chinese Firm Probed on Links with Iraq,” Washington Post, March 17, 2001, at
Congressional Research Service

10

U.S. Restrictions on Huawei Technologies

On December 11, 2001, China became a member of the World Trade Organization (WTO),
agreeing through its membership to remove trade barriers, open its markets to foreign companies
and their exports, and update its legal framework to add transparency, predictability, and
protections into business dealings.86 Subsequently, the Chinese equipment makers Huawei and
ZTE sought to expand to the United States. However, when the companies attempted to win
contracts with major U.S. network operators (e.g., AT&T, Verizon, Sprint), U.S. officials raised
security concerns. In a 2010 letter to the FCC Chair, a bipartisan group of lawmakers stated,
We are very concerned that these companies are being financed by the Chinese government
and are potentially subject to significant influence by the Chinese military, which may
create an opportunity for manipulation of switches, routers, or software embedded in
American telecommunications network so that communications can be disrupted,
intercepted, tampered with, or purposely misrouted.87
Shortly thereafter, the parties abandoned the deals.88 Huawei also pursued acquisitions of U.S.
technology firms; however, the Committee on Foreign Investment in the United States (CFIUS)
identified national security concerns, and the parties abandoned the deals before CFIUS
recommended that the President block the transactions.89 While Huawei was unsuccessful in its
attempts to secure a contract with a major U.S. telecommunications provider, or to acquire U.S.
technology firms, it was successful in winning work in the U.S. rural market. By offering low
prices, low-cost financing, and enhanced customer service to smal and rural providers, Huawei
was able to gain a foothold in the U.S. telecommunications market.90
In 2012, the U.S. House of Representatives Permanent Select Committee on Intel igence released
a report on Huawei and ZTE. The committee expressed concern with Huawei’s ties to the
Chinese government and military; Chinese Communist Party involvement in the Huawei
organization; China’s support of Huawei as a national champion advancing Chinese national
goals; Huawei’s growing presence in telecommunications networks global y; and the potential for
espionage.91 The committee also raised concerns over accusations from U.S. businesses that
Huawei engaged in theft of trade secrets and other proprietary data.92 The committee expressed
concern that Huawei could use its presence in telecommunications networks to engage in
undetected espionage against the U.S. government and businesses.93

https://www.washingtonpost.com/archive/politics/2001/03/17/chinese-firm-probed-on-links-with-iraq/87495bb6-a6d6-
44a1-9d60-42813559493e/.
86 United States T rade Representative, 2020 Report to Congress on China’s WTO Compliance, 2021, p. 5, at
https://ustr.gov/sites/default/files/files/reports/2020/2020UST RReportCongressChinaWT OCompliance.pdf.
87 Letter from Senator Jon Kyl, Senator Joseph Lieberman, and Senator Susan M. Collins, et al., to Julius Genachowski,
Chairman, Federal Communications Commission, October 19, 2010, at https://www.hsgac.senate.gov/media/minority-
media/congressional-leaders-cite-telecommunications-concerns-with-firms-that-have-ties-with-chinese-government.
88 Christopher Rhoads and Rebecca Buckman, “A Chinese T elecom Powerhouse Stumbles on Road to the U.S.,” Wall
Street Journal, July 28, 2005, at https://www.wsj.com/articles/SB112250344291097987.
89 CRS Report R46693, Huawei and U.S. Law, by Stephen P. Mulligan and Chris D. Linebaugh, pp. 3-5.
90 Mike Dano, “Huawei Equipment Currently Deployed by 25% of U.S. Rural Wireless Carriers, RWA Says,”
December 11, 2018, at https://www.fiercewireless.com/wireless/hua wei-equipment -currently-deployed-by-25-u-s-
rural-wireless-carriers-rwa-says.
91 U.S. Congress, House Permanent Select Committee on Intelligence, Investigative Report on the U.S. National
Security Issues Posed by Chinese Telecom m unications Com panies Huawei and ZTE , 112th Cong., 2nd sess., October 8,
2012, p. 32, at https://intelligence.house.gov/news/documentsingle.aspx?DocumentID=96.
92 Ibid., pp. 31-32.
93 Ibid., pp. 13-30.
Congressional Research Service

11

U.S. Restrictions on Huawei Technologies

In 2017, as companies began testing 5G technologies,94 U.S. officials again raised security
concerns with integrating Huawei technologies in U.S. networks and systems.95 U.S. officials
raised specific concerns about a 2017 National Intel igence Law in China,96 which requires that
“any organization or citizen shal support, assist, and cooperate with state intel igence work
according to law.”97 U.S. officials, including members of Congress, expressed concern that the
law would require Huawei to turn over data to the Chinese government upon request,98 an
assertion Huawei denies.99
U.S. Government Restrictions on the Use of Huawei
Equipment
Starting in 2017, the U.S. government began imposing restrictions on Huawei. It restricted the use
of Huawei equipment in DOD networks, prohibited federal agencies from purchasing or using
Huawei equipment, prohibited the use of federal grant and loan funds for Huawei equipment,
restricted exports to Huawei, and funded the replacement of Huawei equipment in U.S. networks.
Restrictions on DOD’s Use of Huawei Equipment
At a June 22, 2016, hearing before the House Armed Services Committee, Representative Rogers
questioned DOD officials about the department’s use of Huawei equipment. Acting Assistant
Secretary of Defense for Homeland Defense and Global Security Thomas Atkin stated, “There are
currently no Huawei or ZTE products on the DOD Unified Capabilities Approved Products List
(APL).”100 The DOD later clarified, “[t]he fact that a product does not appear on an APL does not
mean contractors cannot offer bids or that the government can stil select outside the APL. Short
of suspension and debarment, federal contractors and vendors are not precluded from competing
on DOD contracts.”101 The hearing was one of the first indicators that the U.S. government did

94 Huawei Investment and Holding Co., Ltd., 2017 Annual Report, March 22, 2018, p. 8, at https://www.huawei.com/-/
media/corporate/pdf/annual-report/annual_report2017_en.pdf?la=en. See also Afif Osseiran, “ What Are 5G Systems
For?,” Ericsson (blog), February 23, 2017, at https://www.ericsson.com/en/blog/2017/2/what-are-5g-systems-for.
95 Senator Marco Rubio, “Rubio, Cotton, Van Hollen, Schumer Introduce NDAA Amendment on Huawei, ZT E,” press
release, June 7, 2018, at https://www.rubio.senate.gov/public/index.cfm/press-releases?ID=D49158AB-DA0F-4C89-
BFD6-02C7DF35A536. See also Federal Communications Commission, In the Matter of Protecting Against National
Security Threats to the Com m unications Supply Chain Through FCC Program s—Huawei Designation, June 30, 2020,
pp. 2-10, at https://docs.fcc.gov/public/attachments/DA-20-690A1.pdf.
96 S.Con.Res. 10. See also FCC, In the Matter of Protecting Against National Security Threats to the Communications
Supply Chain Through FCC Program s—Huawei Designation, June 30, 2020, p. 6, at https://docs.fcc.gov/public/
attachments/DA-20-690A1.pdf.
97 Chinese National People’s Congress Network, “National Intelligence Law of the People’s Republic (Adopted at the
28th meeting of the Standing Committee of the 12 th National People’s Congress),” June 27, 2017, at
http://cs.brown.edu/courses/csci1800/sources/2017_PRC_NationalIntelligenceLaw.pdf.
98 S.Con.Res. 10.
99 Arjun Kharpal, “Huawei Says It Would Never Hand Data to China’s Government. Experts Say It Wouldn’t Have a
Choice,” CNBC, March 5, 2019, at https://www.cnbc.com/2019/03/05/huawei-would-have-to-give-data-to-china-
government -if-asked-experts.html.
100 U.S. Congress, House Committee on Armed Services, Military Cyber Operations, 114th Cong., 2nd sess., June 22,
2016, H.A.S.C. No. 114-128.
101 Ibid.
Congressional Research Service

12

U.S. Restrictions on Huawei Technologies

not have a clear picture of its own use of Huawei equipment, or clear polic ies on Huawei use in
U.S. networks.
On December 12, 2017, Congress enacted the National Defense Authorization Act (NDAA) for
Fiscal Year 2018 (P.L. 115-91). Section 1656(a) directs the Secretary of Defense to certify to
congressional defense authorization and appropriations committees102 whether DOD uses
“covered defense telecommunications equipment or services” in its nuclear command, control,
and communications, bal istic missile defense, and continuity of government systems. Congress
named Huawei equipment as equipment “covered” under the act. Section 1656(b) prohibited the
Secretary from procuring or obtaining, or extending or renewing a contract to procure or obtain,
any equipment, system, or service that uses Huawei equipment or services as an essential
component of that system, effective one year from the date of enactment.103
After President Trump signed the FY2018 NDAA into law, DOD officials reported that the
department was screening contracts for Huawei equipment and services. In a Senate Armed
Services Committee hearing on April 19, 2018, Secretary of the Navy Richard Spencer testified
the Navy had halted a contract because it found that a division of the company with which DOD
was contracting listed Huawei as a joint venture partner.104 Further, following February 2018
testimony from intel igence officials expressing concern about Huawei devices at a hearing of the
Senate Select Committee on Intel igence,105 DOD banned the sale of Huawei devices at military
exchanges in April 2018 due to reported concerns from military officials that the Chinese
government could use the devices to track the movement and location of soldiers.106 Thus, after
the passage of the FY2018 NDAA, DOD increased its efforts to identify and restrict use of
Huawei equipment in DOD supply chains and networks, and on military bases.
Restrictions on Federal Agency Use of Huawei Equipment
On August 8, 2018, as DOD was drafting rules for implementing Section 1656 of the FY2018
NDAA, Congress passed and the President signed the John S. McCain National Defense
Authorization Act (NDAA) for Fiscal Year 2019 (P.L. 115-232). The law has three major
provisions that limit the use of Huawei equipment:
 Section 889(a)(1)(A) prohibits federal agencies from procuring equipment,
systems, or services that use “covered” telecommunications equipment or
services as a substantial or essential component of a system.
 Section 889(a)(1)(B) prohibits federal agencies from entering into a contract with
an entity that uses “covered” equipment, system, or service.

102 T he Committee on Armed Services and the Committee on Appropriations of the Senate; and the Committee on
Armed Services and the Committee on Appropriations of the House of Representatives.
103 P.L. 115-91, T itle XVI, Subtitle D, §1656.
104 U.S. Congress, Senate Committee on Armed Services, Hearing to Receive T estimony on the Posture of the
Department of the Navy in Review of the Defense Authorization Request for Fiscal Year 2019 and the Future Years
Defense Program, 115th Cong., 2nd sess., April 19, 2018, p. 19 (transcript), at https://www.armed-services.senate.gov/
hearings/18-04-26-department-of-defense-budget-posture.
105 U.S. Congress, Senate Select Committee on Intelligence, Open Hearing on Worldwide Threats, 115th Cong., 2nd
sess., February 13, 2018, S. Hrg. 115-278.
106 Stu Woo and Gordon Lubold, “Pentagon Orders Stores on Military Bases to Remove Huawei, ZT E Phones,” Wall
Street Journal , May 2, 2018, at https://www.wsj.com/articles/pentagon-asking-military-bases-to-remove-huawei-zte-
phones-1525262076.
Congressional Research Service

13

U.S. Restrictions on Huawei Technologies

 Section 889(b)(1) of the NDAA prohibits agencies from using federal grants and
loans for “covered” telecommunications equipment.
 In the act, Congress defined “covered” equipment as equipment produced by
Huawei and other China-based equipment manufacturers that Congress identified
as companies that pose a threat to U.S. national security.107 Congress mandated
Section 889(a)(1)(A) to take effect August 13, 2019, one year after enactment of
the FY2019 NDAA, and Sections 889(a)(1)(B) and Section 889(b)(1) to take
effect two years after the date of enactment of the FY2019 NDAA or August 13,
2020.
Similarities and Differences Betw een FY2018 and FY2019 NDAAs
While Section 1656 of the FY2018 NDAA and Section 889(a)(1)(A) of the FY2019 NDAA are
similar, there are several notable differences:
 Section 1656 in the NDAA for FY2018 is DOD-specific. It applies to equipment,
systems, or services to carry out the DOD nuclear deterrence or homeland
defense missions. Section 889 pertains to al federal executive agency systems.
 Section 889 exempts certain activities (e.g., services that enable connections to
the facilities of a third party, such as backhaul, roaming, or interconnection
arrangements; or telecommunications equipment that cannot route or redirect
user data traffic).108 Section 1656 has no such exemptions.
 Section 1656 (b)(2) provides the Secretary of Defense with authority to waive the
prohibitions on a case-by-case basis for an additional year if the waiver is in the
national interest, and if the Secretary certifies to the congressional committees109
that the Secretary is removing the covered equipment. Section 889 provides
agency heads with the authority to issue a one-time waiver to an entity for no
more than two years if the entity provides a compel ing justification for the
additional time; a description of the presence of covered telecommunications
equipment or services in its supply chain; and a phase-out plan to eliminate use
of such covered equipment, which the agency head must provide to certain

107 P.L. 115-232, §889(f).
108 General Services Administration (GSA), “GSA Implementation of Section 889, Frequently Asked Questions 3.0,”
September 21, 2020, at https://www.gsa.gov/cdnstatic/Section%20889%20-%20FAQs%2030.pdf. (Backhaul generally
means the links between the edge of a network and the core network, such as the link between cell towers and the core
network; the links can be wired or wireless. Roam ing means the cellular communications received by a visited network
when the caller cannot reach the home network, which may occur when there is lack of coverage or because traffic is
too high on the home network, and is usually through agreement between the carriers. Interconnection agreem ents are
agreements between two carriers to hand off traffic from customer A’s network to customer B’s network.) See Letter
from Christopher D. Roberti, Senior Vice President, U.S. Chamber of Commerce, et al., to Dr. Michael E. Wooten,
Administrator, Office of Federal Procurement Policy, Office of Management and Budget, September 14, 2020, at
https://www.uschamber.com/assets/archived/images/200914_us_chamber_comment_letter_sec_889_part_b_
interim_rule_final_1.0.pdf (stating generally that these activities were exempt to “ enable the section 889 prohibition to
exist alongside the routine traffic exchanges and interconnection agreements that are necessary for global
communications … which carriers are legally obligated to interconnect with (47 U.S.C §251) and offer voice and data
roaming to (47 CFR §20.12) other domestic providers that may have covered equipment or services in their networks
or facilities.”).
109 As defined in 10 U.S.C., §101(a)(16), which includes the Committee on Armed Services and the Committee on
Appropriations of the Senate and of the House of Representatives.
Congressional Research Service

14

U.S. Restrictions on Huawei Technologies

congressional committees.110 Section 889 also grants the Director of National
Intel igence authority to provide a waiver to an agency, extending the date, if the
Director determines the waiver is in the U.S. national security interest.
 Section 1656 lists both the People’s Republic of China (PRC) and the Russian
Federation as “covered countries.” Section 889 lists only the PRC as a “covered
foreign country.”
 Section 1656 defines “covered telecommunications equipment” as equipment
produced or provided by Huawei or ZTE, or using such equipment, or from any
entity that the Secretary reasonably believes to be owned or controlled by a
foreign government. Section 889 names Huawei, ZTE, and three additional
companies,111 and al ows the Secretary of Defense in consultation with the Office
of the Director of National Intel igence and Federal Bureau of Investigation to
identify other companies controlled by or connected to a foreign government for
purposes of this section.
Benefits and Challenges with Section 1656 and Section 889
A key benefit of Section 1656 and Section 889 is that they restrict the use of U.S. government
funding to foreign companies that the U.S. government determined to have engaged in activities
contrary to U.S. national security and foreign policy interests. Additional y, they require U.S.
agencies and entities (e.g., grantees, businesses) to gain visibility into their supply chains to
identify the presence of untrusted equipment in U.S. networks. Supply chain experts note that
visibility into supply chains is the first step in assessing and mitigating security risks.112 U.S.
agencies have acknowledged the value of the activities required under Sections 1656 and 889. For
example, DOD officials supported the provisions, citing chal enges they had in gaining visibility
into their supply chains during their response to the COVID-19 pandemic, and recognized the
value of examining telecommunication supply chains for risks.113
Agencies also recognized the complexity of the task, and expressed concern for the timelines.
Before agencies published rules to implement Section 1656 and Section 889, the Office of
Management and Budget (OMB) requested an extension on the timeline.114 On June 4, 2019, the
then-Acting Director of OMB submitted a legislative proposal to Vice President Pence, for
consideration by the Senate in the FY2020 NDAA. The OMB Director requested a two-year
extension on implementation of Section 889(a)(1)(B), which prohibits the federal government
from contracting with an entity that uses covered equipment, and Section 889(b)(1), which

110 T he term “appropriate congressional committees” is defined in Section 889 as the Committee on Banking, Housing,
and Urban Affairs, the Committee on Foreign Relations, and the Committee on Homeland Security and Governmental
Affairs of the Senate; and the Committee on Financial Services, the Committee on Foreign Affairs, and the Committe e
on Oversight and Government Reform of the House of Representatives.
111 T he three additional companies are Hytera Communications Corporation, Hangzhou Hikvision Digital T echnology
Company, and Dahua T echnology Company.
112 Cybersecurity and Infrastructure Security Agency, Building a More Resilient ICT Supply Chain: Lessons Learned
During the Covid-19 Pandem ic, p. 30, November 2020, at https://www.cisa.gov/sites/default/files/publications/lessons-
learned-during-covid-19-pandemic_508_2.pdf.
113 U.S. Congress, House Committee on Armed Services, Department of Defense COVID-19 Response to Defense
Industrial Base Challenges, 116th Cong., 2nd sess., June 10, 2020, H.A.S.C. No. 116 -84 (Washington: GPO, 2021), p.
27, at https://www.congress.gov/event/116th-congress/house-event/LC66027/text.
114 P.L. 115-232, Section 889(f).
Congressional Research Service

15

U.S. Restrictions on Huawei Technologies

prohibits the use of federal grant and loan funds for covered equipment. In a letter to the Vice
President, the OMB Director stated,
While the Administration recognizes the importance of these prohibitions to national
security, a number of agencies have heard significant concerns from a wide range of
potentially impacted stakeholders who would be affected by section 889, which the
Administration believes could be addressed with a modified implementation schedule.
Challenges that could arise under the current schedule potentially include a dramatic
reduction in the available industrial base (including small business suppliers), who will no
longer be able to sell to the Government, either because their non -government business is
more valuable, or due to the cost of the potential regulatory burdens associated with
compliance with subsections (a)(l)(B) and (b)(l).115
The intent of the request, according to a White House spokesperson, was to give federal
contractors and grantees, including rural federal grant recipients, “time to extricate themselves
from doing business with Huawei and other Chinese tech companies listed in the NDAA.”116 The
OMB Director pressed for greater stakeholder engagement, and stated that the “Administration
believes, based on feedback from impacted stakeholders, that this additional preparatory work
wil better ensure the effective implementation of the prohibition without compromising desired
security objectives.”117 However, a few days later, Reuters reported that the OMB Director told
Congress it could meet the two-year deadline. In a letter to Senator Jim Inhofe, then-chair of the
Senate Armed Services Committee, the OMB Director stated, “Congress has made it clear in
recent days the importance of implementing the law within the two years provided, and we wil ,”
according to reports from Reuters.118
While OMB focused on implementation of Section 889(b), the Federal Acquisition Regulations
(FAR) Council was working on Section 889(a), the acquisition-related restrictions. The FAR
Council is the federal body responsible for writing and revising the Federal Acquisition
Regulations—policies and procedures federal agencies follow during procurements. The FAR
Council is composed of DOD, the General Services Administration (GSA), the National
Aeronautics and Space Administration (NASA), and OMB, which serves as chair.
On August 13, 2019, the FAR Council published rules implementing Section 889(a)(1)(A)—the
rules prohibiting federal agencies from procuring covered equipment.119 The rules, effective
immediately, prohibit contractors from providing any equipment, system, or service that uses
covered telecommunications equipment or services as a substantial or essential component of any
system, or as critical technology as part of any system, unless an exception or a waiver applies.
Under the rules, contractors must report any such equipment, systems, or services discovered

115 Letter from Russell T . Vought, Acting Director, Office of Management and Budget, to Honorable Michael R. Pence,
President of the Senate, June 4, 2019, pp. 3-4, at https://www.whitehouse.gov/wp-content/uploads/2019/06/Pence-
Proposal.pdf.
116 Dan Strumpf, “Acting U.S. Budget Chief Seeks Reprieve on Huawei Ban,” Wall Street Journal, June 10, 2019, at
https://www.wsj.com/articles/acting-budget-chief-seeks-reprieve-on-huawei-ban-11560108418.
117 Letter from Russell T . Vought, Acting Director, Office of Management and Budget, to Honorable Michael R. Pence,
President of the Senate, June 4, 2019, p. 3, at https://www.whitehouse.gov/wp-content/uploads/2019/06/Pence-
Proposal.pdf.
118 Roberta Rampton, “White House Says It Will Meet T wo-Year Deadline for Huawei Ban for Contractors,” Reuters,
June 12, 2019, at https://www.reuters.com/article/us-usa-trade-huawei/white-house-says-it-will-meet -two-year-
deadline-for-huawei-ban-for-contractors-idUSKCN1T E033.
119 DOD, GSA, and NASA, “Federal Acquisition Regulation: Prohibition on Contracting for Certain
T elecommunications and Video Surveillance Services or Equipment,” 84 Federal Register 40216, August 13, 2019.
Congressional Research Service

16

U.S. Restrictions on Huawei Technologies

during contract performance; the requirement flows down to subcontractors.120As permitted under
Section 889, the rules al ow agency heads to grant entities a one-time waiver on a case-by-case
basis for up to two years; in other circumstances, the DNI may grant a waiver to an agency if the
Director determines the waiver is in the U.S. national security interest.121
In the public comment period, vendors and industry associations general y expressed concern
with the rules and the timeline. The Professional Services Council (PSC), an association of over
400 companies that provide federal agencies with products and services, said the rules require
contractors to engage in a “time-consuming, burdensome and costly exercise” to determine
whether products they use are from a banned company.122 The U.S. Chamber of Commerce noted
that “contractors need a reasonable amount of time to investigate and determine with relative
confidence that the equipment in question is actual y covered under ... the rule.”123
On December 13, 2019, the FAR Council published a second interim rule, effective immediately,
amending the FAR to require contractors to certify annual y whether they offer covered
equipment, systems, or services to the government, including Huawei equipment or services.124
Only contractors who answer affirmatively in their annual certification are required to disclose
more information on a contract-by-contract basis.
While the intent of the second interim rule was to reduce regulatory burden, vendors would stil
need to assess their supply chains to determine whether they offer covered products or services to
the government. The FAR Council acknowledged chal enges with visibility in the supply chain,
noting, “[d]ata on the extent of the presence of the covered telecommunications equipment and
services in the global supply chain is extremely limited, as is information as to the costs of
removing and replacing covered equipment or services where it does exist.”125 Nonetheless,
vendors were required to affirm that they conducted a “reasonable inquiry” into whether they use
covered equipment or services, and report on covered equipment use annual y.126
Industry associations continued to express concerns on implementation chal enges. On March 12,
2020, the PSC and the National Defense Industrial Association (NDIA), a trade association for
the U.S. government and defense industry, wrote a joint letter to Senator Jim Inhofe, Senate
Armed Services Committee Chair, expressing concern with the timeline for Section 889(a)(1)(B).
This section prohibits federal agencies from entering into a contract with an entity that uses
covered equipment, systems, or services. The industry associations requested that Congress
extend the timeline on Section 889(a)(1)(B) implementation from August 2020 to February 2021,
citing chal enges presented by the COVID-19 pandemic. The organizations noted,
Part B will impose significant financial and operational costs on medium and small-sized
firms at a moment of substantial uncertainty and hardship. While we agree that Part B
addresses a significant problem in defense supply chains, and that additional measures are

120 DOD, GSA, and NASA, “Federal Acquisition Regulation: Prohibition on Contracting for Certain
T elecommunications and Video Surveillance Services or Equipment,” 84 Federal Register 40216, December 13, 2019.
121 Ibid.
122 Daniel Wilson, “Huawei Ban’s Compliance Rules T oo T axing for Contractors,” Law360, November 1, 2019, at
https://www.law360.com/articles/1215716/huawei-ban-s-compliance-rules-too-taxing-for-contractors.
123 Ibid.
124 DOD, GSA, and NASA, “Federal Acquisition Regulation: Prohibition on Contracting for Certain
T elecommunications and Video Surveillance Services or Equipment,” 84 Federal Register 68314, December 13, 2019.
125 DOD, GSA, and NASA, “Federal Acquisition Regulation: Prohibition on Contracting with Entities Using Certain
T elecommunications and Video Surveillance Services or Equipment,” 85 Federal Register 42671, July 14, 2020.
126 Ibid., p. 42666.
Congressional Research Service

17

U.S. Restrictions on Huawei Technologies

needed to protect DOD information assets from covered equipment, COVID-19 has made
the current implementation timeline infeasible.127
In May 2020, Senators Rubio and Cardin urged OMB to consider the impact to smal business
contractors when crafting guidance or regulations related to Section 889(a)(1)(B).128 They asked
OMB to provide clear processes and adequate time for smal businesses to comply.
DOD officials also expressed concern with the implementation of Section 889. In June 2020,
then-Under Secretary of Defense for Acquisition and Sustainment El en Lord testified that the
COVID-19 pandemic required DOD to accelerate its understanding of its supply base, the
vendors involved, and whether companies associated with adversaries were key suppliers.129 The
Under Secretary noted the value in conducting an inquiry into its supply chain, and the difficulty
in identifying al suppliers for al components and al tiers of its supply chain; in a subsequent
discussion on Section 889(a)(1)(B), the Under Secretary stated Section 889 may have unintended
consequences to the Defense Industrial Base, noting, “The thought that somebody six or seven
levels down in the supply chain could have one camera in a parking lot, and that would invalidate
one of our major primes being able to do business with us, gives us a bit of pause.”130
On July 14, 2020, the FAR Council issued an interim rule implementing Section 889(a)(1)(B).131
The new rule took effect August 13, 2020, for al federal agencies and contractors, unless an
agency head granted a waiver or there was a previous exemption. Entities had 60 days to provide
comments on the interim rule that the Council could consider before it issued final rules.
Some industry stakeholders submitted comments to the FAR Council on the interim rules, seeking
clarification on language in Section 889(a)(1)(B) prohibiting an agency head to “enter into a
contract … with an entity that uses any equipment, system, or service that uses covered
telecommunications equipment” as an essential component of any system. Industry associations
appealed to Congress to clarify the language in Section 889(a)(1)(B), including terms such as
“uses” and “essential component,” and to al ow agencies to grant blanket waivers or extensions,
or extend the timeline so that entities had time to reasonably assess use of covered equipment.132
Some in Congress proposed amendments to the FY2021 NDAA to extend the deadlines for
compliance with Section 889(a)(1)(B). In June 2020, Senator Ron Johnson proposed an
amendment (2193) to the FY2021 NDAA that would have extended the deadline for Section
889(a)(1)(B) compliance to August 2021.133 In July 2020, Representative Virginia Foxx proposed

127 Letter from Herbert J. Carlisle, General, USAF (Ret.), President an d CEO, NDIA, and David J. Berteau, President
and CEO, PSC, to U.S. Senator James Inhofe, Senate Armed Services Committee, Chairman, et al., March 31, 2020, at
https://www.pscouncil.org/a/Resources/2020/PSC_and_NDIA_Letter_for_Extension_to_NDAA_Section_ 889_
Effective_Date.aspx.
128 U.S. Senator Marco Rubio, “Rubio, Cardin Urge OMB to Consider Small Business Contractors Whe n Issuing
Regulations to Secure the Supply Chain,” press release, May 4, 2020, at https://www.rubio.senate.gov/public/
index.cfm/2020/5/rubio-cardin-urge-omb-to-consider-small-business-contractors-when-issuing-regulations-to-secure-
the-supply-chain.
129 U.S. Congress, House Committee on Armed Services, Department of Defense COVID-19 Response to Defense
Industrial Base Challenges, 116th Cong., 2nd sess., June 10, 2020, H.A.S.C. No. 116 -84 (Washington: GPO, 2021), p.
10, at https://www.congress.gov/event/116th-congress/house-event/LC66027/text.
130 Ibid.
131 DOD, GSA, and NASA, “Federal Acquisition Regulation: Prohibition on Contracting with Entities Using Certain
T elecommunications and Video Surveillance Services or Equipment,” 85 Federal Register 42665, July 14, 2020.
132 Lauren C. Williams, “DOD Looks for Extension on Huawei Ban,” FCW, June 16, 2020, at https://fcw.com/articles/
2020/06/16/williams-ndaa-huawei-DOD.aspx; Letter from Industry Organizations to Congress, July 15, 2020, at
https://www.uschamber.com/sites/default/files/200715_coalition_sec.889delay_congress.pdf.
133 Professional Services Council, “Senator Ron Johnson Amendment to the Fiscal Year 2021 NDAA,” June 2020, at
Congressional Research Service

18

U.S. Restrictions on Huawei Technologies

an amendment to Section 889(a)(1)(B) that would have extended the timeline through January 1,
2022.134 Congress did not consider either amendment in its deliberations on the FY2021 NDAA.
On August 12, 2020, a day before the effective date, the DOD Under Secretary for Acquisition
and Sustainment requested that the DNI Director grant DOD a waiver to the prohibitions listed in
Section 889 (a)(1)(B), as permitted under Section 889(d)(2) of the NDAA for FY2019.135 The
DNI granted DOD a temporary waiver until September 30, 2020. On September 29, 2020, the
DNI extended the waiver through September 30, 2022. The waiver al ows DOD to continue to
execute procurement actions for specified items deemed to be of “low-risk potential”136 and
necessary to execute the DOD mission, which the DNI asserts is in the national interest.137
Further, the DNI requested that DOD provide information and updates on risks related to the
waiver and mitigation measures.138 DOD is the only agency that received a blanket extension;
thus, contractors supplying other agencies are stil required to meet the provisions in Section
889(a)(1)(B), unless they receive an individual waiver from an agency.
On January 15, 2021, DOD issued final rules for DOD agencies that included provisions to
ensure compliance with Section 1656 and Section 889,139 effective immediately.140 DOD required
its vendors to stipulate annual y whether “covered defense telecommunications equipment or
services” are included in their product offerings to the U.S. government.141 If a vendor answers
affirmatively, it must report for each contract with DOD use of any covered equipment or
services; DOD extended the reporting from one to three business days and extended the
mitigation from 10 to 30 business days.142 General y, failure to submit required information to the
government constitutes a breach of contract that can lead to cancel ation, termination, and
financial consequences. DOD urged contractors to develop a compliance plan that wil al ow
them to submit accurate representations to the government in the course of their offers.143 Major

https://www.pscouncil.org/a/Resources/2020/Sen._Johnson_889_Amendment_to_FY21_NDAA.aspx .
134 “Amendment to Rules Committee Print 116-57, Offered by Ms. Foxx of North Carolina,” July 13, 2020, at
https://amendments-rules.house.gov/amendments/FOXX_057_xml713201211421142.pdf.
135 Memorandum from John Ratcliffe, Director of National Intelligence, to Ellen M. Lord, Under Secretary for
Acquisition and Sustainment, Department of Defense, August 12, 2020, at http://thecgp.org/images/08-12-
20_Memo_DNI-Response-to-DOD-Waiver-Request_20-00733_U-FOUO_SIGNED-.... pdf.
136 T he Office of the Director of National Intelligence (ODNI) provided guidance to executive agencies for use when
evaluating the risk associated with granting a waiver. Specifically, the ODNI Strategic Supply Chain Security Guidance
identifies “high risk” Product Service Codes (PSCs). If the procurement associated with a waiver request contains any
“high risk” PSCs, ODNI has instructed that additional scrutiny and analysis should be undertaken before the agency
head grants the waiver.
137 Memorandum from John Ratcliffe, Director of National Intelligence, to Ellen Lord, Under Secretary for Acquisition
and Sustainment, Department of Defense, September 29, 2020, at https://thecgp.org/images/Memo-20-00823_DOD-
Request-for-Section-889-Waiver-2.pdf.
138 Ibid.
139 Defense Acquisition Regulations System (DFARS), DOD, “Defense Federal Acquisition Regulation Supplement:
Covered Defense T elecommunications Equipment or Services (DFARS Case 2018 -D022),” 86 Federal Register,
January 15, 2021.
140 T he DNI granted DOD a waiver through September 30, 2022, to continue to do business with companies that
manufacture “low-risk, high-volume” items (e.g., food, clothing, transportation) needed to support DOD’s mission.
141 DFARS 252.204-7016, Covered Defense T elecommunications Equipment or Services-Representation, at
https://www.acq.osd.mil/dpap/dars/dfars/html/current/252204.htm#252.204-7016.
142 DFARS 252.204-7018, Prohibition on the Acquisition of Covered Defense T elecommunications Equipment or
Services, at https://www.acq.osd.mil/dpap/dars/dfars/html/current/252204.htm#252.204-7018.
143 DOD, GSA, and NASA, “Federal Acquisition Regulation: Prohibition on Contracting with Entities Using Certain
T elecommunications and Video Surveillance Services or Equipment,” 85 Federal Register 42670, July 14, 2020.
Congressional Research Service

19

U.S. Restrictions on Huawei Technologies

vendors advised their suppliers to ensure they are in full compliance and to convey the
requirement down to their suppliers at al tiers of their supply chain.144
Media reports indicate implementation is proving chal enging for some businesses, and raising
some legal questions.145 For example, companies working on international development contracts,
where there may be limited choices in terms of telecommunications services, may need to file for
a waiver, a process that can reportedly take four to six weeks and delay vendor start dates.146
Smal businesses may need to hire staff to review supply chains, creating additional cost
burdens.147 Legal experts advised contractors on extensions, noting that the law al ows for an
extension on a case-by-case basis that could give vendors until August 13, 2022, to comply.148
Other legal analysts advised contractors to conduct “reasonable inquiries” and education of
employees and suppliers on a regular basis to ensure compliance.149 Some vendors raised legal
questions as to whether the U.S. government may be liable for costs incurred by contractors due
to required changes to existing contracts.150
The Acquisition Reform Working Group (ARWG)—a stakeholder body composed of large
industry associations that provide goods and services to DOD, including the Computing
Technology Industry Association Technology Industry Council, NDIA, and the U.S. Chamber of
Commerce, submitted a letter to House and Senate Armed Services Committee leadership on June
15, 2021. The ARWG expressed its support for initiatives to improve DOD systems security, but
recommended that in the future Congress require input from stakeholders, a transition period or
phased implementation to ensure effective compliance, and specific guidance from agencies, such
as a detailed list of covered equipment, alternative equipment, and mitigation techniques.151
Restrictions on Federal Grants for Huawei Equipment
As the FAR Council focused on the implementation of Section 889(a)—the acquisition-related
provisions in Section 889—OMB created rules for Section 889(b) that prohibit agency heads

144 For example, see Memo from Vice P resident, Corporate Supply Chain, Northrop Grumman, to Northrop Grumman
Supply Base, Prohibition on Procurement for Certain T elecommunication and Video Surveillance Services or
Equipment, May 18, 2020, at https://www2.northropgrumman.com/suppliers/OASISDocuments/.
May2020_%20MemoInterimRulingCommsSurv -SupplierComm.pdf.
145 T heresa Hitchens, “U.S. Industry Struggles to Strip Chinese T ech from Networks,” Breaking Defense, February 22,
2021, at https://breakingdefense.com/2021/02/us-industry-struggles-to-strip-chinese-tech-from-networks/.
146 Jared Serbu and Scott Maucione, “Second Stage of Chinese T elecom Ban Producing Unintended Consequences,”
Federal News Network, March 29, 2021, at https://federalnewsnetwork.com/DOD-reporters-notebook-jared-serbu/
2021/03/second-stage-of-chinese-telecom-ban-producing-unintended-consequences/.
147 DOD, GSA, and NASA, “Federal Acquisition Regulation: Prohibition on Con tracting with Entities Using Certain
T elecommunications and Video Surveillance Services or Equipment,” 85 Federal Register 42672, July 14, 2020.
148 Michael Mortorano and Paul Ghazaryan, “Coping with Chinese T elecom Ban’s Unclear Requirements,” Law360,
August 19, 2020, at https://www.law360.com/articfraudles/1302625/coping-with-chinese-telecom-ban-s-unclear-
requirements.
149 T rayce Winfrey Howard, “Section 889 Part B Redux: What Are Contractors’ Compliance Obligations in 2021?,”
Wiley Newsletter, July 2021, at https://www.wiley.law/newsletter-Section-889-Part -B-Redux-What -Are-Contractors-
Compliance-Obligations-in-2021.
150 Scott S. Sheffler, “Section 889, the ‘Huawei Ban’ in Federal Contracts: General Scope and Considerations,”
Feldesman T ucker Leifer Fidell LLP (blog), August 10, 2020, at https://www.feldesmantucker.com/section-889-the-
huawei-ban-in-federal-contracts-general-scope-and-considerat ions/.
151 Letter from Acquisition Reform Working Group Members to Senator Jack Reed, Chairman, Senate Armed Services
Committee, et al., June 15, 2021, at https://www.ndia.org/about/media/press-releases/2021/6/17/-/media/sites/press-
releases/documents/arwg-fy-2022-proactive-letter-final-06152021.ashx.
Congressional Research Service

20

U.S. Restrictions on Huawei Technologies

from obligating or expending grant and loan funds to obtain or enter into a contract to obtain
covered equipment, systems, or services. After industry input,152 OMB refined its grant
regulations, added a new section, 2 C.F.R. 200.216, to reflect the Section 889 restrictions, and
published final guidance on August 13, 2020, which applies to al U.S. agency grants.153
Benefits and Challenges of Grant Restrictions
A benefit of the grant restrictions is that they apply to al federal granting agencies. Granting
agencies integrate OMB rules into grant guidance and agreements; grantees incorporate rules into
subgrantee agreements. Thus, with one set of rules from OMB, which are applicable to al
agencies, there is a greater chance for consistent application of the rules related to prohibitions on
covered equipment. Further, with federal grants exceeding $750 bil ion annual y, the restrictions
could significantly reduce use of untrusted equipment across many missions (e.g., homeland
security, education, overseas programs).154
Some agencies have faced chal enges implementing Section 889(b) rules, including U.S. agencies
that support overseas programs through grants. Recipients of U.S. Agency for International
Development (USAID) funding reported that “some 70% of missions in Africa and 65% of
missions in Asia are apparently relying on service providers with prohibited equipment [e.g.,
Huawei, ZTE].”155 USAID, which formed a task force on Section 889(b), surveyed current use of
prohibited equipment, and requested an agency-level waiver from the DNI that would al ow it, for
a limited time, to permit use of affected internet and phone services. The waiver was due to expire
on September 30, 2020; USAID obtained a waiver extension through September 30, 2022.156
In guidance to grantees, USAID emphasized its waiver does not alter the FAR requirements for
contractors to disclose use of covered equipment. Individual contractors seeking a waiver are stil
required to provide a compel ing justification for the additional time to implement the
requirements under Section 889, cal ing for a “full and complete laydown of the presence of
covered telecommunications or video surveil ance equipment or services in the entity’s supply
chain, and a Phase‐Out Plan for eliminating the covered equipment or services.”157 The agency
emphasized in guidance to recipients that “it is in the best interest of the contractor to replace
covered technology, if it wants to continue to receive U.S. government contracts.”158 Although
Section 889(b)(2) requires agencies to prioritize funding to “rip and replace” covered equipment,
USAID stipulates that grant funds can be used to remove and replace covered equipment only
when the equipment is used in support of the award.159

152 Jake Parker, “ Here’s What NDAA Section 889 Really Means for Federal Grants,” Security Industry Association,
August 13, 2020, at https://www.securityindustry.org/2020/08/13/heres-what -ndaa-section-889-really-means-for-
federal-grants/.
153 Office of Management and Budget, “Guidance for Grants and Agreements,” 85 Federal Register 49515, August 13,
2020.
154 CRS Report R40638, Federal Grants to State and Local Governments: A Historical Perspective on Contemporary
Issues, by Robert Jay Dilger.
155 USAID, Section 889 T ask Force, “Section 889 Frequently Asked Questions (FAQs) for Cont ractors and Recipients
of USAID awards,” October 23, 2020, p. 4, at https://www.usaid.gov/sites/default/files/documents/Partner_FAQs_
Master_10232020.pdf.
156 Ibid., p. 5.
157 Ibid.
158 Ibid., p. 4.
159 USAID, Section 889 T ask Force, “Section 889 Frequently Asked Questions (FAQs) for Contractors and Recipients
of USAID awards,” October 23, 2020, p. 13, at https://www.usaid.gov/sites/default/files/documents/
Congressional Research Service

21

U.S. Restrictions on Huawei Technologies

Like industry stakeholders, grantees have sought clarity on Section 889(b), asking for a definitive
list of banned equipment, processes on waivers, clarification on whether individual projects
funded with nonfederal funds must comply, and whether funding is available for replacement
equipment.160 In May 2021, the U.S. Chief Financial Officers Council (CFOC)—an organization
of CFOs and Deputy CFOs of the largest federal agencies, and senior officials from OMB and the
Department of the Treasury who work together to improve financial management in the U.S.
government—provided additional guidance on Section 889. The CFOC issued a list of frequently
asked questions (FAQs), which provided details on covered entities, foreign countries, and
equipment; processes for certifying compliance; al owable and unal owable costs; and waivers.161
Huawei Challenges Section 889 Restrictions in Court
On March 7, 2019, Huawei chal enged the U.S. government in U.S. district court, arguing that
Section 889 is unconstitutional.162 Among other things, Huawei claimed that the U.S. government
inflicted punishment on it through legislation, without provision of the protections of a judicial
trial or due process.163 In February 2020, the federal court rejected Huawei’s claim, and noted,
“What Huawei pejoratively labels as Congress unconstitutional y adjudicating facts is better
characterized as a thorough congressional investigation into a potential threat against the nation’s
cybersecurity. Congress’s investigation led to the passing of a defense-appropriations bil as a
prophylactic response to that threat.”164
Restrictions on USF Subsidies for Huawei Equipment
In April 2018, the FCC proposed rules prohibiting the use of the USF monies for purchase of
equipment and services from companies that pose a national security risk.165 The FCC stated that
it issued the rules in response to a letter from lawmakers expressing concern about the use of
Huawei equipment in U.S. telecommunications networks,166 and to requirements in Section 1656
of the FY2018 NDAA. The USF, a fund the FCC oversees, provides subsidies to
telecommunications providers to serve high-cost areas, to make available, without discrimination,
communications services at reasonable charges, to al people.167

Partner_FAQs_Master_10232020.pdf.
160 For example, see guidance from Brown University, “Compliance Notice,” June 2, 2021, at
https://compliance.brown.edu/sites/g/files/dprerj446/files/NDAA_Sec_889_Compliance_Notice_6.2.21.pdf.
161 U.S. Chief Financial Officers Council, 2 C.F.R. Frequently Asked Questions, May 3, 2021, pp. 10-14, at
https://www.cfo.gov/assets/files/2CFR-FrequentlyAskedQuestions_2021050321.pdf.
162 CRS Report R46693, Huawei and U.S. Law, by Stephen P. Mulligan and Chris D. Linebaugh.
163 Huawei Technologies USA, Inc., et al. v. The United States of America, et al. , 13 (U.S. District Court for the Eastern
District of T exas 2019).
164 CRS Report R46693, Huawei and U.S. Law, by Stephen P. Mulligan and Chris D. Linebaugh.
165 FCC, In the Matter of Protecting Against National Security Threats to the Communications Supply Chain Through
FCC Program s, WC Docket 18-89, Notice of Proposed Rulemaking, April 16, 2018, pp. 2 -3, at https://docs.fcc.gov/
public/attachments/FCC-19-121A1.pdf.
166 Letter from Senator T om Cotton et al., U.S. Senate, to Hon. Ajit Pai, Chairman, FCC, December 20, 2017, at
https://apps.fcc.gov/edocs_public/attachmatch/DOC-349859A2.pdf.
167 47 U.S.C. §151.
Congressional Research Service

22

U.S. Restrictions on Huawei Technologies

Benefits and Challenges with USF Restrictions
A key benefit to restrictions on USF subsidies is that they target telecommunications operators,
Huawei’s key U.S. customers. Targeting the $8 bil ion USF fund—a program that subsidizes
telecommunications network deployment and upgrade—and offering replacement funds through
the Secure and Trusted Communications Networks Reimbursement Program,168 provides
incentives for telecommunications operators to remove untrusted equipment from U.S. networks.
Further, restrictions on USF funds, which support smal and rural network operators, could
eliminate Huawei’s last remaining foothold in the United States, which U.S. officials see as
necessary to secure U.S. networks.169
A chal enge is in implementing the restrictions. In comments to the FCC on the proposed rule, the
Rural Wireless Association (RWA) stated many of its members—smal and rural wireless network
operators—rely on USF subsidies to build out networks and provide services in high-cost
areas.170 The RWA estimated that about 25% of U.S. rural providers use some Huawei equipment,
and restricting the use of USF funds could affect network buildout and services in rural areas.171
The FCC’s proposed rule would, if adopted, “significantly and negatively impact smal and rural
wireless carriers’ ability to operate,” and the cost of compliance would overwhelm rural
operators, according to the RWA.172 The RWA argued that Section 889(b)(1) restricts use of
federal grants and loan funds, not subsidies, and thus should not be applied to USF subsidies.173
While the RWA and others contested the FCC’s proposed rule, Congress acted to codify the
FCC’s proposed rules, and restrict the use of USF funds for equipment that could pose a national
security threat. In March 2020, Congress passed and the President signed the Secure and Trusted
Communications Network Act of 2019 (P.L. 116-124). The law requires the FCC to develop a list
of covered equipment—that is, equipment that poses a threat to national security—adopt rules to
prohibit the use of subsidies administered by the FCC (i.e., USF) for covered equipment, and
create a program to make reimbursements to providers to replace covered equipment from
networks of smal , rural providers. Congress authorized $1 bil ion to fund the replacement of
covered equipment, and stipulated that if the FCC finds $1 bil ion is not enough to replace the
covered equipment, it should notify the appropriate congressional committees.
On June 30, 2020, the FCC designated Huawei and its affiliates, along with several other firms, as
covered entities.174 In September 2020, the FCC announced that, after an extensive data survey of
operators, it determined replacement costs to be in the range of $1.8 bil ion.175 In December 2020,

168 CRS Insight IN11663, Secure and Trusted Communications Networks Reimbursement Program: Frequently Asked
Questions, by Jill C. Gallagher.
169 Jeffrey Starks, Commissioner, FCC, “T he Huawei T hreat Is Already Here (Op-Ed),” The Hill, May 26, 2019, at
https://thehill.com/opinion/technology/445493-the-huawei-threat-is-already-here.
170 Generally, rural areas are expansive and require deployment across a wider region, and yield fewer customers to
support operations, expansion, and upgrades; thus, many rural regions are high -cost regions.
171 Reply Comments of the Rural Wireless Association to the FCC, In the Matter of Protecting Against National
Security Threats to the Com m unications Supply Chain Through FCC Program s, WC Docket 18-89, December 7, 2018,
at https://ecfsapi.fcc.gov/file/12080817518045/FY%202019%20NDAA%20Reply%20Comments%20 -%20FINAL.pdf.
172 Ibid., p. 14.
173 Ibid., pp.4-8.
174 FCC, “FCC Designates Huawei and ZT E,” press release, June 30, 2020, at https://docs.fcc.gov/public/attachments/
DOC-365255A1.pdf.
175 FCC, “FCC Releases Results of Supply Chain Data Request,” press release, September 4, 2020, at
https://docs.fcc.gov/public/attachments/DOC-366702A1.pdf.
Congressional Research Service

23

U.S. Restrictions on Huawei Technologies

in the Consolidated Appropriations Act, 2021 (P.L. 116-260), Congress appropriated $1.9 bil ion
for the reimbursement program.176 The FCC plans to al ocate funds to reimburse entities for costs
related to the removal and replacement of Huawei and ZTE equipment from U.S. networks.177
On July 13, 2021, the FCC adopted final rules for the program to align with the Consolidated
Appropriations Act, 2021, amendments, which extends eligibility to carriers with 10 mil ion or
fewer customers and authorizes reimbursement to include al communications equipment and
services produced or provided by Huawei or ZTE.178 The FCC announced it would accept
applications for reimbursement on October 29, 2021, through January 14, 2022.179
On December 21, 2021, the RWA and NTCA – The Rural Broadband Association (NTCA)180
requested a one-month extension of the filing deadline, stating that “collecting the necessary cel
site data, fil ing out the numerous entries in the location, equipment, and cost estimate excel
sheets, and attaching necessary documentation is a massive undertaking that requires substantial
work.”181 The groups noted that the task is particularly chal enging for smal providers, given
their limited workforce, and staffing chal enges, especial y during the holiday season and due to
the COVID-19 Omicron variant.182 On December 29, 2021, the FCC extended the deadline two
weeks, to January 28, 2022.183
While U.S. officials see “rip and replace” as necessary to ensure the security of U.S. networks,
some smal carriers have expressed concern that the task is complex and the directive may disrupt
service in rural areas, including 911 service.184 The president and chief executive officer (CEO) of
the Competitive Carriers Association, which represents many smal er and regional carriers, stated,
“Directives are being issued with no idea of the complexity. In some cases, our members must
replace everything from antennas and remote radio heads (RRHs) down to baseband units
(BBUs) and the core without interrupting service. It’s real y ‘replace, then rip’ rather than ‘rip and
replace’ that is often bandied about inside the Beltway.”185

176 CRS Insight IN11663, Secure and Trusted Communications Networks Reimbursement Program: Frequently Asked
Questions, by Jill C. Gallagher.
177 Statement of Acting Chairwoman Jessica Rosenworcel, In the Matter of Protecting Against National Security
Threats to the Com m unications Supply Chain Through FCC Program s, WC Docket No. 18-89, T hird Further Notice of
Proposed Rulemaking (February 17, 2021), at https://www.fcc.gov/document/implementing-secure-and-trusted-
communications-networks-act-0.
178 FCC, In the Matter of Protecting Against National Security Threats to the Communications Supply Chain Through
FCC Program s, T hird Report and Order, WC Docket No. 18 -89, adopted July 13, 2021, at https://docs.fcc.gov/public/
attachments/FCC-21-86A1.pdf.
179 FCC, “Supply Chain Reimbursement Program: Webinar for Broadband Providers,” September 27, 2021, p. 9, at
https://www.fcc.gov/sites/default/files/supply-chain-webinar-presentation-09272021.pdf.
180 T he organization’s name was the National T elephone Cooperative Association. In 2002. It changed its name to the
National T elecommunications Cooperative Association, and is now called NT CA—the Rural Broadband Association.
181 FCC, In the Matter of Protecting Against National Security Threats to the Communications Supply Chain Through
FCC Program s, Motion for Extension of T ime of the Rural Wireless Association, Inc. and NT CA – T he Rural
Broadband Association, WC Docket No. 18 -89, December 21, 2021, pp. 1-2, at https://www.ntca.org/sites/default/files/
documents/2021-12/RWA-NTCA%20Filing%20Deadline%20Extension%20Request_12.21.21_FINAL.docx.pdf .
182 Ibid.
183 FCC, In the Matter of Protecting against National Security Threats to the Communications Supply Chain Through
FCC Program s, Motion for Extension of Tim e of the Rural Wireless Association, Inc. and NTCA—The Rural
Broadband Association, Order, WC Docket No. 18-89, adopted December 29, 2021,
184 John Celentano, “What ‘Rip and Replace’ Really Means,” Inside Towers, March 31, 2020, at
https://insidetowers.com/cell-tower-news-what -rip-and-replace-really-means/.
185 Ibid.
Congressional Research Service

24

U.S. Restrictions on Huawei Technologies

The FCC expects to issue funding al ocation decisions, based on submitted reimbursement
requests, in the second quarter of 2022.186 Some operators have raised concerns over eligible
costs that are not fully covered (e.g., customer equipment such as routers), possible workforce
shortages that may affect their ability to instal new equipment, and the one-year timeline for
implementation.187
Huawei Challenges Restrictions on USF Subsidies
On July 30, 2020, Huawei petitioned the FCC to reconsider its decision to ban the use of USF
funds for Huawei equipment and services; in December 2020, the FCC upheld its decision.188 On
February 8, 2021, Huawei filed a petition in the U.S. Court of Appeals for the Fifth Circuit,
chal enging the FCC’s decision and authority.189
Huawei argued that in its cost-benefit analysis, the FCC ignored the benefits of Huawei’s service
to rural U.S. communities; according to Huawei, it exerts competitive pressure on prices in the
United States. The company contends that removing its equipment from U.S. networks could
create long-term interoperability problems and affect service in rural regions where it is often the
sole supplier, and that excluding its equipment could cause some carriers to go out of business,
raise prices, widen the digital divide, and slow 5G deployment.190 In June 2021, the federal court
denied Huawei’s petition for review, finding that “the [FCC] reasonably acted within the broad
authority Congress gave it to regulate communications.”191
Restrictions on Exports to Huawei
On May 21, 2019, the DOC Bureau of Industry and Security (BIS) published rules that added
Huawei and 68 of its non-U.S. affiliates to the Entity List,192 citing long-standing U.S.
government concerns that Huawei has been engaged in activities contrary to national security and
foreign policy interests of the United States.193 DOC stated that Huawei raised sufficient concern,
and that prior review of exports, re-exports, or transfers of items, and the possible imposition of
conditions or denials on shipments to the listed entities, would enhance BIS’s ability to prevent
activities contrary to the national security or foreign policy interests of the United States.194
The Entity List specifies the license requirements it imposes on each listed person or entity.195
BIS imposed a license requirement for al items subject to the Export Administration Regulations

186 FCC, Secure and Trusted Communications Networks Reimbursement Program: Frequently Asked Questions,
September 24, 2021, at https://docs.fcc.gov/public/attachments/DOC-376062A1.pdf.
187 Bevin Fletcher, “FCC Sets T imelines for Huawei Rip and Replace Reimbursement,” Fierce Wireless, September 28,
2021, at https://www.fiercewireless.com/regulatory/fcc-sets-timelines-for-huawei-rip-and-replace-reimbursement .
188 FCC, “FCC Affirms Designation of Huawei as National Security T hreat,” press release, December 10, 2020, at
https://docs.fcc.gov/public/attachments/DOC-368700A1.pdf.
189 Huawei Technologies USA, Inc., and Huawei Technologies Co., Ltd ., v. Federal Communications Commission,
United States of Am erica, Case 21-60089, p. 3 (United States Court of Appeals for the Fifth Circuit 2021).
190 Ibid., p. 47.
191 Ibid., p. 2.
192 BIS administers the Export Administration Regulations (15 C.F.R., subchapter C, parts 730-774), export controls on
commercial, dual-use, and less sensitive military items. See CRS In Focus IF11627, U.S. Export Control Reform s and
China: Issues for Congress, by Ian F. Fergusson and Karen M. Sutter.
193 BIS, “Addition of Entities to the Entity List,” 84 Federal Register 22961, May 21, 2019.
194 Ibid.
195 CRS In Focus IF11627, U.S. Export Control Reforms and China: Issues for Congress, by Ian F. Fergusson and
Congressional Research Service

25

U.S. Restrictions on Huawei Technologies

(EAR),196 which comprises most U.S.-made products, including technology and software, and
certain foreign-produced items, such as items that contain a certain percentage of control ed U.S.-
origin content,197 and items that are a “direct product” of controlled U.S. technologies.198 Under
the rules, the export, re-export, or transfer of any such item to Huawei or its listed affiliates
requires a license (i.e., approval from DOC); however, BIS adopted a license review policy of
“presumption of denial,” meaning that it is unlikely to approve such license applications.199
On May 22, 2019, DOC created a temporary general license (TGL), effective May 20, 2019, that
temporarily authorized engagement in “certain transactions, involving the export, re-export, or
transfer of items subject to the EAR”; the TGL al owed U.S. companies to temporarily provide
certain products and services to Huawei and its affiliates.200 The TGL al owed for some exports
from U.S. parties to Huawei to “assure the continued secure operation of portions of
telecommunications systems while al owing time for affected companies and persons to identify
and shift to other sources of equipment, software, and technology.”201 It al owed U.S. software
providers that support Huawei to send software patches to ensure networks and devices are
secure; gave U.S. companies that supply component parts to Huawei time to adjust their business
strategy; and al owed rural carriers that rely on Huawei equipment time to determine their path
forward to ensure continuity of services for customers.202 The TGL was valid for 90 days. DOC
extended the TGL several times, from May 2019 through August 13, 2020.203
On May 15, 2020, BIS issued interim rules tightening restrictions on Huawei and its affiliates.
The restrictions apply to certain foreign-made items produced or developed by Huawei that are a
direct product of certain controlled U.S. technologies and software, or a direct product of a plant
outside the United States where the plant itself uses certain controlled U.S. technologies and
software.204 DOC noted that while companies seeking to export U.S. items to Huawei and its
affiliates are required to obtain a license, “Huawei has continued to use U.S. software and
technology to design semiconductors, undermining the national security and foreign policy
purposes of the Entity List by commissioning their production in overseas foundries using U.S.
equipment.”205 The rules apply when there is knowledge the items made with U.S. technologies

Karen M. Sutter.
196 For items subject to the EAR, see 15 C.F.R. §734.3. For a list of BIS-controlled items (also called the Commerce
Control list, or CCL), see 15 C.F.R. §774.
197 Also known as the de minimis rules, see 15 C.F.R. §734.4.
198 See 15 C.F.R. §736.2(b)
199 BIS, “Addition of Entities to the Entity List,” 84 Federal Register 22962, May 21, 2019.
200 BIS, “T emporary General License,” 84 Federal Register 23468-23471, May 22, 2019.
201 BIS, “Huawei T emporary General License Extension Frequently Asked Questions,” May 18, 2020, at
https://www.bis.doc.gov/index.php/documents/pdfs/2446-huawei-entity-list-temporary-general-license-extension-
faqs/file.
202 Jeanne Whalen and Felicia Sonmez, “Huawei Business Ban Leaves Rural Wireless Companies with Few
Alternatives,” Washington Post, April 19, 2019, at https://www.washingtonpost.com/business/2019/08/19/huawei-
business-ban-leaves-rural-wireless-companies-with-few-alternat ives/.
203 On August 21, 2019, BIS published an extension of the temporary general license (T GL), effective August 19, 2019,
that extended the validity of the T GL another 90 days, through November 18, 2019, and added 46 additional affiliates
to the Entity List. BIS extended the T GL for another 90 days, through February 16, 2020, then again through April 1,
2020, then May 15, 2020, and then through August 13, 2020, when the T GL expired.
204 DOC, “Export Administration Regulations: Amendments to General Prohibit ion T hree (Foreign-Produced Direct
Product Rule) and the Entity List,” 85 Federal Register 29849, May 19, 2020.
205 DOC, “Commerce Addresses Huawei’s Efforts to Undermine Entity List, Restricts Products Designed and Produced
with U.S. T echnologies,” press release, May 15, 2020, at https://2017-2021.commerce.gov/news/press-releases/2020/
Congressional Research Service

26

U.S. Restrictions on Huawei Technologies

and software are destined for specified entities (i.e., Huawei and its affiliates). In its rules, DOC
provided some time for entities to adjust, al owing foundries to continue shipments without a
license until September 14, 2020.206
On August 17, 2020, DOC issued final rules, tightening restrictions on Huawei.207 First, DOC
added 38 Huawei affiliates to the Entity List, “because they present a significant risk of acting on
Huawei’s behalf contrary to the national security or foreign policy interests of the United
States.”208 Second, DOC al owed the TGL to expire, discontinuing its approval for transactions
supporting continued operations of networks and for support and service of Huawei devices;
DOC al owed companies to continue to engage in cybersecurity research and vulnerability
disclosures involving Huawei. Third, DOC tightened restrictions on foreign-produced items.
DOC amended its rules to close loopholes that Huawei was using to obtain advanced chipsets,
such as leveraging overseas foundries that use U.S. software or technology to design and develop
its advanced chips,209 and shipping chips directly to the end-user avoid requirements for a license
for items produced or developed by Huawei.210 The August rules impose a license requirement on
foreign-made items (1) when the item is produced using certain controlled U.S. technology and
software, or produced in a plant that uses such technology and software, and (2) when there is
knowledge the item wil be incorporated into the “production or development of any part,
component, or equipment produced, purchased, or ordered” by Huawei or its affiliates, or when
they are a party to such transactions (e.g., a purchaser, end-user).
In its August 2020 rules, BIS adopted a “presumption of denial” license review policy. However,
it also noted that “[s]ophistication and capabilities of technology in items is a factor in license
application review,” and that it would review on a case-by-case basis license applications for
items capable of supporting the development or production of telecom systems, equipment, and
devices below the 5G level (e.g., 3G, 4G).211 Thus, while the rules restricted Huawei’s access to
U.S.-made semiconductors and foreign-produced semiconductors made with U.S. technologies,
and tightened restrictions on advanced (e.g., 5G) chipsets specifical y, they al owed some
flexibility for BIS to approve transactions for less-advanced (e.g., 3G, 4G) technologies.
In December 2020, DOC placed additional entities, including Chinese chipmaker Semiconductor
Manufacturing International Corporation (SMIC), a supplier of Huawei, on the Entity List. DOC
added SMIC and 10 of its affiliates due to “evidence of activities between SMIC and entities of
concern in the Chinese military industrial complex.”212 The rules limit SMIC’s ability to acquire

05/commerce-addresses-huaweis-efforts-undermine-entity-list-restricts.html.
206 Ibid.
207 DOC, “Commerce Department Further Restricts Huawei Access to U.S. T echnology and Adds another 38 Affiliates
to the Entity List,” press release, August 17, 2020, at https://2017-2021.commerce.gov/ news/press-
releases/2020/08/commerce-department-further-restricts-huawei-access-us-technology-and.html.
208 Ibid.
209 BIS, “Addition of Huawei Non-U.S. Affiliates to the Entity List, the Removal of T emporary General License, and
Amendments to General Prohibition T hree (Foreign -Produced Direct Product Rule),” 85 Federal Register 51602,
August 20, 2020, at https://www.govinfo.gov/content/pkg/FR-2020-08-20/pdf/2020-18213.pdf.
210 Lori E. Scheetz, John R. Shane, and Daniel P. Brooks, “Commerce T ightens Huawei Restrictions; Aims to Close
Loopholes,” Wiley Alert, August 18, 2020, at https://www.wiley.law/alert-Commerce-T ightens-Huawei-Restrictions-
Aims-to-Close-Loopholes.
211 BIS, “Addition of Huawei Non-U.S. Affiliates to the Entity List, the Removal of T emporary General License, and
Amendments to General Prohibition T hree (Foreign -Produced Direct Product Rule),” 85 Federal Register 51602,
August 20, 2020, at https://www.govinfo.gov/content/pkg/FR-2020-08-20/pdf/2020-18213.pdf.
212 BIS, “Addition of Entities to the Entity List, Revision of Entry on the Entity List, and Removal of Entities from the
Congressional Research Service

27

U.S. Restrictions on Huawei Technologies

certain U.S. technology by requiring companies seeking to export such technologies to SMIC to
apply for a license (i.e., gain approval) to sel to the company. DOC stipulated that items uniquely
required to produce advanced semiconductors are subject to a presumption of denial “to prevent
such key enabling technology from supporting China’s military modernization efforts.”213 In the
rules, DOC adopted a presumption of denial policy for items uniquely required to produce more
advanced technologies (e.g., 5G chips), but al owed for case-by-case review for al other items.214
Market analysts say that placing SMIC on the Entity List could “choke China’s semiconductor
supply chain,” affect its ability to develop and produce advanced (5G) semiconductors used in
smartphones and network equipment, and affect Huawei’s smartphone business.215 Some analysts
contend that restricting SMIC’s access to U.S. technologies and equipment could accelerate
Chinese efforts to develop its chip-making capabilities.216 In December 2021, Chinese media
reported that Huawei’s CEO stated it is continuing to invest in its flagship smartphones; however,
with restrictions limiting its access to U.S. chipsets and technologies, the next release (expected
in 2022) would use Huawei’s HarmonyOS operating system (replacing Google Android), and
would not have 5G capability, but would instead use 4G chipsets. The CEO noted that its
Shanghai R&D Center is working to bring 5G chipsets to Huawei smartphones in the future, but
did not provide specific dates.217
Benefits and Challenges in Restrictions on Exports
In its May 2019 Public Notice adding Huawei to the Entity List, DOC identified Huawei as an
entity acting contrary to the national security and foreign policy interests of the United States,
citing the indictment filed by DOJ in January 2019, charging Huawei and its officials with
financial fraud, sanctions violations, obstruction of justice, and other offenses.218 DOC asserts that
the restrictions on exports to Huawei enhance DOC’s ability to prevent activities contrary to the
national security or foreign policy interests of the United States—a key benefit of the restrictions
on exports.219 There is bipartisan support in Congress for restrictions on exports, without
exceptions, to limit U.S. exports to a company that the U.S. government has identified as
engaging in activities contrary to U.S. national security and foreign policy interests.220

Entity List ” 85 Federal Register 83416-83432, December 22, 2020.
213 Ibid., p. 83416.
214 BIS, “Addition of Entities to the Entity List, Revision of Entry on the Entity List, and Removal of Entities From the
Entity List ,” 85 Federal Register 83416, December 22, 2020.
215 Xiuxi Zhu, “Potential US Ban on SMIC Could Choke China’s Semiconductor Supply Chain,” Standard and Poor’s
Global Market Intelligence, September 20, 2020, at https://www.spglobal.com/marketintelligence/en/news-insights/
latest-news-headlines/potential-us-ban-on-smic-could-choke-china-s-semiconductor-supply-chain-60375095.
216 Ian King, “Biden Faces a Policy Dilemma with China’s Biggest Chipmaker,” Bloomberg, December 22, 2021, at
https://www.bloomberg.com/news/newsletters/2021-12-22/smic-poses-policy-dilemma-for-biden-s-china-chip-
crackdown.
217 Efe Udin, “Huawei Will Continue to Work on Its Kirin Chip Design,” GizChina, December 7, 2021, at
https://www.gizchina.com/2021/12/07/huawei-self-developed-5g-chip-solution-will-arrive-soon/.
218 DOJ, “Chinese T elecommunications Conglomerate Huawei and Huawei CFO Wanzhou Meng Charged with
Financial Fraud,” press release, January 28, 2019, at https://www.justice.gov/opa/pr/chinese-telecommunications-
conglomerate-huawei-and-huawei-cfo-wanzhou-meng-charged-financial.
219 BIS, “Addition of Entities to the Entity List,” 84 Federal Register 22961, May 21, 2019.
220 Maggie Miller, “T rump Reversal on Huawei Get Bipartisan Pushback,” The Hill, July 2, 2019, at https://thehill.com/
policy/cybersecurity/451260-trump-reversal-on-huawei-gets-bipartisan-pushback; also Karen Freifeld, “ Huawei Gets
U.S. Approvals to Buy Auto Chips, Sparking Blow Back,” Reuters, August 25, 2021.
Congressional Research Service

28

link to page 32

U.S. Restrictions on Huawei Technologies

A key chal enge to restrictions on exports is in balancing U.S. national security interests with U.S.
economic interests, including potential losses to U.S. businesses that supply Huawei with parts.
At its 2018 Core Supplier Convention, Huawei reported that 33 of its top 92 suppliers are U.S.
companies.221 In 2018, Huawei reported that it had purchased $70 bil ion in parts from 13,000
global suppliers, including about $11 bil ion in products from U.S. businesses, such as
semiconductors from Qualcomm and Broadcom, and software from Microsoft and Google.222
In 2018, Goldman Sachs assessed the revenues of Huawei’s U.S. suppliers (examining the
percentage of their revenues that come from Huawei), and their exposure should business with
Huawei cease or diminish (Figure 1).
Figure 1. U.S. Suppliers to Huawei (2018)

Source: Sijia Jiang and Michael Martina, “Huawei’s $105 bil ion business at stake after U.S. broadside,” Reuters,
May 16, 2019, at https://www.reuters.com/article/us-usa-trade-china-huawei-analysis/huaweis-105-bil ion-
business-at-stake-after-u-s-broadside-idUSKCN1SM123. The graphic was created by Reuters Graphics on
December 13, 2018, available at https://fingfx.thomsonreuters.com/gfx/editorcharts/USA-CHINA-HUAWEI/
0H001GSE93H2/index.html (used with permission from Reuters).
Notes: This graphic shows some U.S. suppliers to Huawei, created after the arrest of Huawei’s Chief Financial
Officer (CFO) in December 2018. Goldman Sachs, the investment firm, used company data (Q32018) to
determine U.S. firms’ revenues from Huawei (in yuan) and their exposure to risk if that business were to cease
or diminish. Reuters created this graphic from the Goldman Sachs data. The yearly average exchange rate in
2018 for converting Chinese Yuan to U.S. Dol ars was 6.620, per the U.S. Internal Revenue Service. Pct=percent.
In May 2019, after DOC added Huawei to the Entity List, many U.S. telecommunications
technology companies that supply Huawei with component parts adjusted their revenue
projections. The adjustments provide some insight into the business relationships and
interdependencies between U.S. firms and Huawei.
For example, Qorvo Inc., a U.S. chipmaker and provider of wireless technology solutions,
reported that sales to Huawei and its affiliates accounted for approximately $469 mil ion or 15%
of its total revenue in its fiscal year ending March 30, 2019.223 Due to restrictions on exports, it

221 Zhang Yushuo, “ Huawei Exposes Its Surprising Group of Key Suppliers for the First T ime,” Yicai, November 30,
2018, at https://www.yicaiglobal.com/news/huawei-exposes-its-surprising-group-of-key-suppliers-for-the-first-time.
222 Sherisse Pham, “Losing Huawei as a Customer Could Cost U.S. T ech Companies $11 Billion,” CNN Business, May
17, 2019, at https://www.cnn.com/2019/05/17/tech/huawei-us-ban-suppliers/index.html.
223 Qorvo, “Qorvo® Updates Financial Guidance Due to U.S. Department of Commerce Action Against Huawei,” press
release, May 21, 2019, at https://www.qorvo.com/newsroom/news/2019/qorvo-updates-financial-guidance-due-to-us-
department -of-commerce-action-against -huawei.
Congressional Research Service

29

U.S. Restrictions on Huawei Technologies

expected a $50 mil ion loss in revenue in the first quarter of 2020 (April to June 2019).224 Analog
Devices Inc., a large U.S. chipmaker, projected a decline in revenue for its third quarter (June to
August 2019) that fel below what some financial analysts expected, due to an estimated $60
mil ion in lost sales to Huawei.225 Lumentum Holdings Inc., which makes advanced optical
networking products, reported in May 2019 that Huawei represented 18% of its total revenue in
its third quarter of 2019, ending March 30, 2019.226 It projected its fourth-quarter revenue for
2019 (April to June 2019) at $405 mil ion to $425 mil ion; in May 2019, the company adjusted its
fourth-quarter revenue, projecting revenues in the range of $375 mil ion to $390 mil ion, due to
restrictions on sales to Huawei.227 In June 2019, U.S. chipmaker Broadcom—a supplier to
Huawei—projected that it would make $2 bil ion less in annual sales due to the restrictions on
exports; it reduced its 2019 end-year revenue forecast from $24.5 bil ion to $22.5 bil ion.228
U.S. companies and industry associations expressed their concerns to the Trump Administration
about the restrictions. On July 1, 2019, Bloomberg reported that the Semiconductor Industry
Association (SIA) met with the Commerce and Treasury Secretaries to convey that the
restrictions would hurt the U.S. semiconductor industry by cutting off access to their largest
market and hurting their ability to invest in R&D, and U.S. national and economic security.229 In
response to industry concerns, the Trump Administration loosened some restrictions on exports.
In July 2019, President Trump, in a press conference at the conclusion of the G-20 summit in
Japan, mentioned U.S. businesses were “not exactly happy” with the restrictions and announced
he would al ow certain exports to Huawei.230 In August 2019, DOC extended the TGL for 90
days, permitting certain transactions with Huawei to continue through November 2019.
Many U.S. companies noted the complexities and uncertainties of the restrictions in their
quarterly financial statements.231 Some companies reported publicly that they had halted sales to

224 Ibid.
225 Catherine Larkin, “Analog Devices Earnings Forecast May Be Blunted by Huawei Ban,” Bloomberg Quint, May 20,
2019, at https://www.bloombergquint.com/onweb/analog-devices-earnings-forecast -may-be-blunted-by-huawei-ban.
226 Lumentum, “Lumentum Provides Update on U.S. Department of Commerce Entity List Designation of Huawei and
Affiliates and the Impact to Fiscal Fourth Quarter Ending June 29, 2019 Outlook ,” May 20, 2019, press release, at
https://www.lumentum.com/en/media-room/news-releases/lumentum-provides-update-us-department -commerce-
entity-list-designation.
227 Reuters Staff, “Lumentum says halting all Huawei shipments, cuts quarterly forecast,” Reuters, May 20, 2019, at
https://www.reuters.com/article/us-huawei-suppliers/lumentum-says-halting-all-huawei-shipments-cuts-quarterly-
forecast -idUSKCN1SQ1B5.
228 Asa Fitch, “Broadcom to T ake $2 Billion Hit from Huawei Ban,” Wall Street Journal, June 13, 2019, at
https://www.wsj.com/articles/broadcom-lowers-revenue-outlook-amid-trade-tensions-11560459528?mod=
article_inline; see also Mike Dano, “ U.S. Government’s Huawei Ban Pushes Business to Qualcomm’s Rival,” Light
Reading, March 26, 2021, at https://www.lightreading.com/security/us-governments-huawei-ban-pushes-business-to-
qualcomms-rival/d/d-id/7683202067.
229 Jenny Leonard and Ian King, “How U.S. Chipmakers Pressed T rump to Ease China’s Huawei Ban,” Bloomberg,
July 1, 2019, at https://www.bloomberg.com/news/articles/2019-07-02/how-u-s-chipmakers-pressed-trump-to-ease-
huawei-export -controls.
230 C-Span, “President T rump Closing News Conference at G-20 Summit,” press conference (video, starting 00:14:52),
June 29, 2019, at https://www.c-span.org/video/?462171-1/president -trump-holds-news-conference-20-summit -japan.
231 See, for example, Qualcomm, Form 10-Q, July 31, 2019, p. 57, at https://investor.qualcomm.com/sec-filings/
quarterly-reports?form_type=&year=2019. (See “ Risks Related to Our Businesses,” where Qualcomm states:
“Import/export regulations, such as the U.S. Export Administration Regulations administered by the U.S. Department
of Commerce, are complex, change frequently, have generally become more stringent over time and have intensified
under the current U.S. administration. If our customers or suppliers fail to comply with these regulations, we may be
required to suspend activit ies with these customers or suppliers, which could negatively impact our results of
operations. Additionally, we may be required to incur significant expense to comply with, or to remedy violations of,
Congressional Research Service

30

U.S. Restrictions on Huawei Technologies

Huawei, and were assessing the impact of the restrictions on their revenues, examining the TGL
to determine what they could legal y sel to Huawei, and were preparing to submit license
applications that would permit longer-term sales of some products to Huawei.232
While SIA warned that restricting sales to Huawei would hurt the U.S. telecommunications
technology industry and impact U.S. national and economic security,233 some Members of
Congress expressed concern that lifting the restrictions, as President Trump planned, would create
national security risks. In a letter to President Trump dated November 21, 2019, a group of 10
lawmakers urged the President to suspend approval of licenses, and take steps to “ensure
Congress is appropriately informed about the license approval process and related national
security implications going forward.”234 In November 2020, Representative Michael McCaul,
ranking member of the House Foreign Affairs Committee, in a letter to the Commerce Secretary,
also requested detailed information on licenses to assess the implementation of the restrictions,
and fulfil Congress’s duty to protect U.S. national security.235 Although license information is
deemed confidential under Section 1761(h) of the Export Control Reform Act of 2018 (P.L. 115-
232), Representative McCaul noted that license information had appeared in the press, and thus
should be released to Congress.236
For example, in November 2019, the Washington Post reported information it received from
industry sources, which stated that DOC approved the first licenses, authorizing exports to listed
entities; DOC approved one-quarter of 300 license applications submitted, according to the
Post.237 In March 2021, Reuters reported that, based on DOC documents it had seen, between
2019 and 2020, DOC approved licenses for companies to sel $87 bil ion worth of goods to
Huawei, and that licenses had a term of four years.238 According to Reuters, in the month of

these regulations.”)
232 Angela Moon, “Exclusive: Google Suspends Some Business with Huawei After T rump Blacklist —Source,”
Reuters, May 19, 2019. See also Lumentum, “Lumentum Provides Update on U.S. Department of Commerce Entity
List Designation of Huawei and Affiliates and the Impact to Fiscal Fourth Quarter Ending June 29, 2019 Outlook,”
press release, May 20, 2019, at https://ir.qorvo.com/news-releases/news-release-details/qorvor-updates-financial-
guidance-due-us-department -commerce; and Qorvo, Inc., Q1 2020 Results (Earning Call T ranscript), August 1, 2019,
https://seekingalpha.com/article/4280496-qorvo-inc-qrvo-ceo-robert -bruggeworth-on-q1-2020-results-earnings-call-
transcript .
233 Jenny Leonard and Ian King, “How U.S. Chipmakers Pressed T rump to Ease China’s Huawei Ban,” Bloomberg,
July 1, 2019, at https://www.bloomberg.com/news/articles/2019-07-02/how-u-s-chipmakers-pressed-trump-to-ease-
huawei-export -controls.
234 Letter from Senators Charles E. Schumer, T om Cotton, and Chris Van Hollen, et al., to President Donald J. T rump,
November 21, 2019, at https://www.democrats.senate.gov/imo/media/doc/11.21.19%20POTUS-Huawei%20Letter.pdf.
235 Letter from Michael T . McCaul, Ranking Member, House Foreign Affairs Committee, to Honorable Wilbur Ross,
Secretary of Commerce, November 9, 2020, at https://gop-foreignaffairs.house.gov/wp-content/uploads/2021/02/
11.9.20-Letter-to-Secretary-Ross-re-Oversight -of-Export-Control-Licensing.pdf.
236 House Foreign Affairs Committee, “McCaul Calls Out Misleading Answers from Under Secretary Pelter at U.S. -
China Economic and Security Review Commission Hearing,” press release, September 9, 2021, at https://gop-
foreignaffairs.house.gov/press-release/mccaul-calls-out -misleading-answers-from-under-secretary-pelter-at-u-s-china-
economic-and-security-review-commission-hearing/.
237 Jeanne Whalen, Joseph Marks, and Ellen Nakashima, “U.S. Approves First Licenses for T ech Sales to Huawei,”
Washington Post, November 20, 2019, at https://www.washingtonpost.com/technology/2019/11/20/us-said-approve-
first-licenses-tech-sales-huawei/.
238 Karen Freifeld, “Biden Administration Adds New Limits on Huawei’s Suppliers,” Reuters, March 11, 2021, at
https://www.reuters.com/article/us-usa-huawei-tech/biden-administration-adds-new-limits-on-huaweis-suppliers-
idUSKBN2B3336.
Congressional Research Service

31

U.S. Restrictions on Huawei Technologies

January 2021, DOC denied 116 licenses worth $119 bil ion and approved four worth $20 mil ion;
300 applications worth $296 mil ion were stil pending in January 2021.239
In October 2021, the House Foreign Affairs Committee requested licensing information from
DOC and published it.240 From November 9, 2020, to April 20, 2021, U.S. companies submitted
169 license requests to sel products to Huawei. DOC approved 113 licenses worth $61 bil ion;
DOC returned 48 licenses worth $28 mil ion with no further action, and denied two licenses
worth $57 mil ion.241 The documents show that while DOC instituted restrictions in May 2019, it
continued to al ow some exports to Huawei—first under the TGL and then through individual
licenses. Thus, both the Trump and Biden Administrations issued approvals on sales of products
to Huawei, which some Members of Congress assert are contrary to U.S. national security and
foreign policy objectives. Consequently, Congress has pressed for greater transparency into and
reporting on licenses, license criteria, and approvals.242
The restrictions affected U.S. businesses in different ways. Some companies halted sales to
Huawei, while others continued to export certain items to Huawei under the TGL or through
longer-term licenses. Nonetheless, many U.S. companies saw reductions in sales and revenues
because of the restrictions on exports to Huawei. For example, North Carolina-based Qorvo, Inc.,
reported that it received a license to sel some products to Huawei; however, in October 2021,
Qorvo reported Huawei accounted for less than 5% of its revenue for the year ending 2021 (down
from 15% in 2019).243 Since then, Qorvo appears to have shifted its focus to emerging
technologies to offset loss in revenue, reporting success in sales of gal ium nitride (GaN)
semiconductors and 5G base stations.244
Other firms have reported they are no longer doing business with Huawei, but have increased
business outside of China and expanded their work in emerging technologies to offset losses in
revenue. Cree, a North Carolina-based chipmaker and provider of wireless technologies, noted in
2019 that sales to Huawei generated $15 mil ion a quarter for the company.245 In August 2019,
after DOC added Huawei to the Entity List, Cree’s CEO stated the restrictions created
uncertainties for the business, “because a substantial portion of the semiconductor market is in
China, and a substantial percentage of the growth is there as wel .”246 In August 2020, Cree (now
Wolfspeed) reported it was no longer doing business with Huawei, but was able to repurpose
products intended for Huawei, and increase its business outside of China, which helped to offset
losses.247 It also invested in GaN and silicon carbide semiconductors, and in October 2021

239 Ibid.
240 Export Control Licensing Decisions for Huawei (November 9, 2020 -April 20, 2021),” data obtained by the House
Foreign Affairs Committee from the Department of Commerce, released by the Committee on October 21, 2021, at
https://gop-foreignaffairs.house.gov/wp-content/uploads/2021/10/Huawei-Licensing-Information.pdf.
241 Ibid.
242 For example, see H.R. 1595 and H.R. 4792.
243 Qorvo, Inc., FY21 Annual Report (for the fiscal year ending April 3, 2021), June 29, 2021, p. 7, at
https://ir.qorvo.com/static-files/660e1b53-4846-4008-bfb3-00b86658f34f.
244 Ibid.
245 Rick Smith, “What If China ‘Just Never Came Back?’ Cree CEO Warns of T rade War, Huawei Ban Impact,” WRAL
TechWire, August 21, 2019, at https://www.wraltechwire.com/2019/08/21/what -if-china-just-never-came-back-cree-
ceo-warns-of-trade-war-huawei-ban-impact/.
246 Ibid.
247 Cree, Inc., CEO Gregg Lowe on Q4 2020 Results—Earnings Call T ranscript, August 18, 2020, at
https://seekingalpha.com/article/4369598-cree-inc-cree-ceo-gregg-lowe-on-q4-2020-results-earnings-call-transcript.
Congressional Research Service

32

U.S. Restrictions on Huawei Technologies

announced it had entered into a strategic supplier agreement with General Motors (GM) to
provide silicon carbide chips for GM’s electric vehicle programs.248
Other companies saw slowed growth after DOC announced the restrictions. In September 2019,
after California-based Broadcom projected a $2 bil ion reduction in revenues due to the
restrictions on exports, the CEO noted in a quarterly earnings cal that it is managing business
“with an expectation that we wil continue to operate in a very low growth uncertain macro
environment for the foreseeable future.”249 In December 2019, Broadcom financial reports
indicated that its revenues diminished, due to restrictions on sales to Huawei, but were slightly
higher than the $22.5 bil ion projected ($22.597 bil ion), driven by increased 5G deployments.250
Its rate of growth in terms of revenues year-over-year had slowed from 18.21% in 2018 to 8.39%
in 2019 to 5.71% in 2020, due in part to the restrictions, according to some market analysts.251 In
September 2021, the CEO stated its revenues were up 16.44% year-over-year for the quarter,
which he attributed to upticks in sales to global network operators deploying 5G networks,
increased demand from business customers and device makers, and strategic investments in
software and cloud services that helped to offset restrictions on sales of semiconductors.252 Like
other firms, Broadcom saw gains in other areas, which helped to offset some of the loss in
revenue.
Some U.S. chipmakers saw loss of market share. In March 2021, industry analysts from the
consulting firm Omdia reported that Taiwan’s Mediatek surpassed California-based Qualcomm as
the world’s largest supplier of chips for smartphones, which some market analysts attribute to
U.S. government restrictions on the sale of supplies to Huawei.253 In September 2021,
Counterpoint Research, a technology market research firm, reported that Mediatek continues to
gain market share, capturing a 43% share of the global smartphone System on Chip market in the
second quarter of 2021 compared to a 35% share in the first quarter of 2021, while Qualcomm
accounted for 24% market share in the second quarter of 2021, compared to 29% in the previous
quarter.254
In some cases, U.S. firms may benefit from the restrictions by potential y gaining market share
once held by Huawei. As the leading global supplier of network switching equipment, California-

248 Wolfspeed, Inc., “General Motors and Wolfspeed Forge Strategic Supplier Agreement to Leverage Silicon Carbide
for GM’s Future Electric Vehicle Programs,” press release, October 4, 2021, at https://www.wolfspeed.com/company/
news-events/news/general-motors-wolfspeed-forge-strategic-supplier-agreement -to-leverage-silicon-carbide-for-
electric-vehicle-programs.
249 Broadcom, Inc. (AVGO), CEO Hock T an on Q3 2021 Results (Earnings Call T ranscript), September 2, 2021, at
https://seekingalpha.com/article/4453351-broadcom-inc-avgo-ceo-hock-tan-on-q3-2021-results-earnings-call-
transcript .
250 AVGO, “Broadcom Revenue 2009-2021,” accessed November 29, 2021, at https://www.macrotrends.net/stocks/
charts/AVGO/broadcom/revenue. See also Sophia Nicholson, “ T he Worst Is Over for Broadcom Stock —Can It
Rally?,” Market Realist, December 26, 2019, at https://marketrealist.com/2019/12/worst-over-broadcom-stock-can-it-
rally/.
251 Ibid.
252 Broadcom, Inc. (AVGO), CEO Hock T an on Q3 2021 Results (Earnings Call T ranscript), September 2, 2021, at
https://seekingalpha.com/article/4453351-broadcom-inc-avgo-ceo-hock-tan-on-q3-2021-results-earnings-call-
transcript .
253 Mike Dano, “US Government’s Huawei Ban Pushes Business to Qualcomm’s Rival,” Light Reading, March 26,
2021, at https://www.lightreading.com/security/us-governments-huawei-ban-pushes-business-to-qualcomms-rival/d/d-
id/768367.
254 Counterpoint, “MediaTek Captures Record 43% Share of Smartphone AP/SoC Shipments in Q2 2021,” press
release, September 6, 2021, at https://www.counterpointresearch.com/mediatek-captures-record-43-share-smartphone-
apsoc-shipments-q2-2021/.
Congressional Research Service

33

U.S. Restrictions on Huawei Technologies

based Cisco Systems could increase its global market share,255 as the United States and
potential y other foreign governments restrict use of Huawei equipment in telecommunications
networks and business systems.256 Companies that receive U.S. government licenses to do
business with Huawei, such as California-based Intel, may also gain market share.257
Other U.S. companies have shifted strategies to offset losses in revenue. For example, California-
based Marvel Technology reported an 11% decline in revenues in the first quarter of its FY2020
(February 2019 to May 2019) due to export restrictions, according to analysts at BMO Capital
Markets.258 Marvel pivoted to 5G technologies, data centers, and storage solutions for telecom
operators, and collaborated with 5G telecom equipment makers (e.g., Ericsson, Nokia, and
Samsung) to support 5G deployments. In its June 2021 earnings cal , Marvel reported it
“delivered the fourth straight quarter of double-digit year-on-year revenue growth despite
industry-wide supply constraints that have tightened considerably over the same time period.”259
Some U.S. companies were hard-hit by the restrictions. In October 2020, California-based
Neophotonics, which derived more than 40% of its revenues from Huawei in 2018, announced
cost-cutting measures, including reductions in its workforce by approximately 4%.260 In
November 2021, Lumentum announced plans to acquire Neophotonics for $918 mil ion to
strengthen its offerings in high-speed optical components for cloud and telecom network
infrastructure, including 5G, Internet of Things (IoT), and next-generation networks.261
While the restrictions on exports limit Huawei’s access to U.S. technologies—to prevent it from
engaging in activities that are contrary to U.S. national security and foreign policy interests —they
have also resulted in reduced revenues for some U.S. businesses, which some business groups
warn could lead to reduced investments in R&D and diminished competitiveness of U.S. firms.262
A chal enge for Congress is in balancing U.S. national and economic security interests.

255 Eric J. Savitz, “ Huawei Faces Increased Scrutiny. Apple, Cisco, and Other T ech Stocks Could Benefit ,” Barron’s,
July 9, 2020, at https://www.barrons.com/articles/huawei-sanctions-apple-cisco-and-other-tech-stocks-51594321329.
256 Harsh V. Pant, “India Draws a Line in the 5G Sand,” Foreign Policy, May 18, 2021, at https://foreignpolicy.com/
2021/05/18/india-draws-a-line-in-the-5g-sand. See also Joe Panettieri, “Huawei Banned in Which Countries,”
CHANNELe2e, December 27, 2021, at https://www.channele2e.com/business/enterprise/huawei-banned-in-which-
countries/3/ (discussing actual and de facto bans on Huawei use in 5G networks in Australia, New Zealand, United
Kingdom, Sweden, and Japan, and other countries considering restrictions or band on Huawei).
257 Mario McKellop, “Intel Receives U.S. Commerce Department Approval to Sell Select Products to Huawei,” The
Burn-In, September 25, 2020, at https://www.theburnin.com/featured/intel-receives-us-approval-sell-products-huawei-
2020-09-25/.
258 Priya Nigam, “ Marvell Prospects Affected by Loss of Huawei Revenue, BMO Says,” Benzinga, May 31, 2019, at
Benzinga, https://www.benzinga.com/analyst -ratings/analyst -color/19/05/13841173/marvell-prospects-affected-by-
loss-of-huawei-revenue-bmo-says.
259 Marvell T echnology Group, Ltd., Q1 2022 Earnings Call T ranscript, June 7, 2021, at https://news.alphastreet.com/
marvell-technology-group-ltd-mrvl-q1-2022-earnings-conference-call-transcript/.
260 Stephen Hardy, “NeoPhotonics Looks to Cut Costs, Including Layoffs,” Lightwave, October 5, 2020, at
https://www.lightwaveonline.com/business/earnings-statements/article/14184704/neophotonics-looks-to-cut-costs-
including-layoffs.
261 Lumentum, “Lumentum to Acquire NeoPhotonics to Accelerate Optical Network Speed and Scalability,” press
release, November 4, 2021, at https://www.lumentum.com/en/media-room/news-releases/lumentum-acquire-
neophotonics-accelerate-optical-network-speed-and.
262 U.S. Chamber of Commerce, Understanding U.S.-China Decoupling, February 17, 2021, p. 3, at
https://www.uschamber.com/international/understanding-us-china-decoupling-macro-trends-and-industry-impacts.
Congressional Research Service

34

U.S. Restrictions on Huawei Technologies

Considerations for Congress
In response to concerns about Huawei and other Chinese telecommunications firms, the 117th
Congress has enacted legislation to protect U.S. networks, and proposed legislation to address
implementation chal enges, ensure security of U.S. networks and supply chains, protect U.S.
competitiveness in the global telecommunications market, and improve global network security.
The following section discusses chal enges raised by these issues and proposals to address those
chal enges.
Ensuring Security of U.S. Networks
Congress may seek to assess the effectiveness of these policies, programs, and restrictions to
determine whether they are making U.S. networks more secure.
Challenges Assessing Impact of Restrictions
Since implementation of U.S. policies related to Huawei is stil under way, it is difficult to assess
their impact on network security. For example, while DOC added Huawei to the Entity List in
May 2019, it permitted bil ions of dollars in sales of technology to Huawei under the TGL and
individual licenses through at least April 2021. Additional y, while many agencies have
implemented rules to restrict federal agency purchases of Huawei equipment, in some cases, such
as with DOD, timelines for compliance were extended, which would affect an assessment of
impact. Final y, the Reimbursement Program, while funded in December 2020, is set to release
funding in the first quarter of 2022; thus, Congress may not see the removal of Huawei equipment
from U.S. networks until 2023 or later. As a result, Congress may not see the full impact of
restrictions for several years.
Congress could hold oversight hearings with a wide array of agencies and their stakeholders (e.g.,
contractors, grantees, overseas vendors, smal businesses, universities) on their progress in
implementing the existing restrictions, chal enges, and impact on U.S. network security.
Congress may gain some insight on implementation of Section 889 through oversight hearings
and reports required under Section 889. Section 889 requires entities seeking a waiver (e.g.,
extended time to comply), to provide the federal contracting agency with a full and complete
description of the presence of covered equipment in its network and a phase-out plan, which the
federal agency must provide to the congressional oversight committees. Congress could use these
reports to gain insight into Huawei use, and to inform future policies regarding Huawei.
Congress may also monitor implementation through review of DOC licenses. Legislation in the
117th Congress proposes greater transparency to enable Congress to monitor transactions with
Huawei. H.R. 1595 would prohibit DOC from removing Huawei (or its subsidiaries or affiliates)
from the Entity List unless DOC certifies that Huawei (1) has not engaged in activities that are
contrary to U.S. national security or foreign policy interests; and (2) is not owned, controlled, or
influenced by the Communist Party of China. The bill would also require DOC to submit a
monthly report identifying and describing all license applications and approvals. Through greater
transparency, Congress may be in a better position to assess the implementation and effectiveness
of U.S. restrictions on exports to Huawei, and their impact on U.S. network security.
Challenges in Identifying and Addressing Continually Emerging Risks
A key chal enge rests in the fact that the U.S. network is part of a larger interconnected global
network; thus, a breach of one network could affect al others. Experts assert that removing
Congressional Research Service

35

U.S. Restrictions on Huawei Technologies

Huawei equipment from U.S. networks may remove some risks, but that other risks remain.
Former FCC Chairman Tom Wheeler agrees that Huawei equipment poses a risk to U.S. network
infrastructure due to its ties to the Chinese government, its theft of trade secrets, and obligations
to assist the Chinese government with intel igence work, but argues that “keeping Chinese
hardware out of most U.S. network infrastructure does not equate to successfully preventing
foreign espionage or sabotage of those networks…. The internet, after al , is about the
interconnection of disparate networks; keeping Chinese hardware out does not translate into
keeping Chinese-originated digital code out.”263
Wheeler asserts that foreign adversaries have exploited non-Chinese telecommunications
infrastructure, and that the U.S. government should remain focused on promoting an open
economic model and leading 5G cybersecurity standards.264 S. 1260, which passed the Senate in
June 2021, would address some of these issues, providing funding to bolster the U.S.
semiconductor industry, create test beds for open, interoperable network solutions,265 and support
5G R&D and domestic and international efforts to secure the information and communications
technology (ICT) supply chain and global networks.
An ongoing chal enge in ensuring network security is the fact that new companies and
technologies continual y enter the market, which may present new risks to networks. Congress
may be interested in continual monitoring and oversight of U.S. network security through
hearings or investigative reports. Congress hears from U.S. intel igence agencies on network
security concerns in annual hearings. Other agencies and advisory councils that study network
security may also provide useful information to Congress. For example, the National Security
Technical Advisory Council to the President (NSTAC) provides recommendations to the
President on network security. The FCC Communications Security, Reliability, and
Interoperability Council (CSRIC) provides reports on aspects of network security. The
Department of Homeland Security (DHS) works with federal agencies to help ensure federal
networks are secure. Hearings that include interagency advisory committees may help Congress
gain awareness of network security issues and mitigation recommendations, which may inform
future policies aimed at securing U.S. and global networks.
In the past, Congress has gained insight on entities posing security risks through hearings and
investigations. Congress first documented its concerns about Huawei in the 2012 HPSCI
investigative report. While Congress did not restrict use of Huawei equipment at the time, the
report signaled to U.S. telecommunications providers that Congress was concerned with
Huawei’s ties to the Chinese government and its business practices. Major U.S. telecom operators
noted that they opted not to use the equipment in their networks because of the concerns raised in
the 2012 report, and were not as affected by the restrictions on Huawei use.266
Thus, while the 2012 report identified entities of concern, it did not recommend or impose
restrictions on use, timelines for transitioning away from untrusted equipment, or actions for
businesses. As a result, smal er U.S. operators and other entities (e.g., universities) made

263 T om Wheeler, “Keeping Huawei Hardware Out of the U.S. Is Not Enough to Secure 5G,” Lawfare, February 20,
2019, at https://www.lawfareblog.com/keeping-huawei-hardware-out-us-not-enough-secure-5g.
264 Ibid.
265 For example, Open Radio Access Network (ORAN) architecture would allow operators to move away from single -
vendor network solutions and toward open, interoperable architectures tha t would enable operators to select component
parts from various vendors. A security advantage would be that if one part posed security risks, it could be replaced
with the equipment of another vendor without replacement of the entire network.
266 Jessica Bursztynsky, “Verizon CEO: We’re Doing Just Fine Without Using Any Equipment from Chinese T ech
Giant Huawei,” CNBC, July 11, 2019, at https://www.cnbc.com/2019/07/11/ceo-hans-vestberg-says-verizon-does-not-
use-any-huawei-equipment.html.
Congressional Research Service

36

U.S. Restrictions on Huawei Technologies

decisions to use the equipment. Thus, identifying the entity of risk may not halt its use; education,
mitigation strategies, or restrictions may be needed to address security risks from entities or
equipment that poses a threat to U.S. networks.
Since 2017, Congress has identified foreign adversaries in legislation and restricted use of
equipment from listed entities; however, the list has varied in individual legislation and agency
implementation. For example, Section 1656 of the FY2018 NDAA lists both the People’s
Republic of China (PRC) and the Russian Federation as covered countries, while Section 889 of
the FY2019 NDAA lists only the PRC as a covered foreign country. Similarly, while the DOC
Entity List covers Huawei and its more than 150 affiliates, the FCC “covered” list includes only
Huawei and no affiliates. Further, multiple lists of entities and equipment are emerging, such as
the DOC Entity List, FCC covered list, DHS National Risk Management Center list of equipment
categories that may pose a risk, and the DOD List of Chinese Military Companies. Having
multiple lists of countries, entities, and equipment that pose a threat to U.S. national security may
present chal enges to agencies and vendors and may hinder effective implementation.
Further, while there are lists of foreign adversaries, covered entities, affiliates, and equipment, the
lists reside in multiple agencies. Responsibilities are dispersed across federal agencies. For
example, Executive Order 13873 assigns responsibility to the Commerce Secretary to coordinate
with other agencies to identify and mitigate risks posed by transactions; the DNI to continue to
assess ICT threats; and the DHS Secretary to assess and identify entities, hardware, software, and
services that pose the greatest potential consequences to U.S. national security. Legislation in the
117th Congress (H.R. 2685) would require DOC’s National Telecommunications and Information
Administration to examine and report on the cybersecurity of mobile service networks and their
vulnerability to cyberattacks. Another bil (H.R. 4067) would require the FCC’s CSRIC to
provide biennial reporting to the FCC, Congress, and the public on recommendations to improve
network security.
While some applaud the whole of government approach to assessing, identifying, and addressing
risks, others, including some Members of Congress, have recognized a need to clarify governance
responsibilities with regard to network security, to “ensure the United States can mount
coordinated and efficient responses to security incidents and also identify new risks.”267
Ensuring U.S. Competitiveness
Some scholars assert the restrictions on trade with Huawei could backfire, and hurt U.S.
businesses, the U.S. economy, and U.S. competitiveness.268 These scholars assert that the global
telecommunications market is interdependent, with “coupled global networks of trade,
production, knowledge, innovation, finance, regional and global institutions, and security,” and
that the “global system generates shared benefits for cooperation, [and] shared costs for non-
cooperation.”269 Some foreign policy experts assert there are economic and diplomatic tools that
could ensure security of networks and counter Huawei’s growth and dominance in the global

267 U.S. Congress, House Committee on Energy and Commerce, Subcommittee on Communications and T echnology, A
Safe Wireless Future: Securing our Networks and S upply (June 25, 2021 Memorandum for Subcommittee Staff, in
preparation of June 30, 2021 hearing), 117 th Cong., 1st sess., June 30, 2021, p. 2, at https://energycommerce.house.gov/
sites/democrats.energycommerce.house.gov/files/documents/Briefing%20Memo_CAT%20Hrg_2021.06.30.pdf.
268 James Andrew Lewis, “Selling to Huawei,” Center for Strategic and International Studies, August 19, 2019, at
https://www.csis.org/analysis/selling-huawei.
269 T homas D. Lairson, David Skidmore, and Wu Xinbo, “Why the U.S. Campaign Against Huawei Backfired,” The
Diplom at, May 13, 2020, at https://thediplomat.com/2020/05/why-the-us-campaign-against-huawei-backfired/.
Congressional Research Service

37

U.S. Restrictions on Huawei Technologies

telecommunications market. They say deep engagement and a “coordinated and wel -funded
effort to enhance U.S. competitiveness” are better able to protect national security, foreign policy,
and economic interests than trade restrictions.270
Some policymakers have cal ed for a government-led assessment of ICT markets, so the U.S.
government has a better sense of companies leading the market. For example, H.R. 4028 would
direct the Secretary of Commerce to submit to Congress within one-year a report analyzing the
state of economic competitiveness of trusted vendors in the ICT supply chain, identify which
components or technologies are critical or vulnerable, and identify components or technologies
on which U.S. networks depend. It would also require the Commerce Secretary to submit to
Congress a strategy to ensure the competitiveness of trusted vendors in the United States.
Some analysts suggest the U.S. government could help U.S. businesses advance 5G technologies
through funding for R&D, low-cost financing for product development, policies and programs to
help smal businesses bring 5G products to market faster, and export credits for firms seeking to
sel products global y.271 They, and some lawmakers, argue government intervention may be
necessary to compete with Huawei—a multinational conglomerate that leverages low-cost state-
supported financing and other Chinese government subsidies and policies to undercut
competitors’ prices.272 Scholars at the ITIF have encouraged the Biden Administration to
document China’s unfair trade practices, including Huawei’s domestic market guarantees and
state-supported financing that enables Huawei to undercut competitor pricing, and decide whether
the United States should bring any of these concerns before the WTO for action.273
In the 117th Congress, Members have introduced legislation to provide U.S. government funding
to the telecommunications industry for R&D on advanced technologies and 5G applications, to
assure U.S. leadership and competitiveness in the global telecommunications industry. Experts
assert that federal funding for R&D could counter China’s investment in its domestic
telecommunications technology firms, including Huawei, which invests heavily in R&D. In order
to increase the competitiveness of U.S. businesses in the global 5G market, some scholars cal for
increased funding from the U.S. government for the semiconductor industry, 5G deployment,
development of 5G “use cases” U.S. businesses can offer global y,274 and 6G technologies.275 The
U.S. Innovation and Competition Act (S. 1260), which passed the Senate on June 8, 2021, would
fund investment in U.S.-based semiconductor fabrication facilities and equipment, and test beds

270 Ibid.
271 Center for Strategic and International Studies, Accelerating 5G in the United States, March 2021, at https://csis-
website-prod.s3.amazonaws.com/s3fs-public/publication/210301_Lewis_Accelerating_5G_
0.pdf?klP.hknBLh2uJBCPMkxs5_wRNzFiMbdO.
272 Jeanne Whalen, “T o Counter China, Some Republicans Are Abandoning Free-Market Orthodoxy,” Washington
Post, August 26, 2020, at https://www.washingtonpost.com/business/2020/08/26/republicans-favor-industrial-policy/.
273 Stephen Ezell, False Promises II: The Continuing Gap Between China’s WTO Commitments and Its Practices,
Information Technology and Innovation Foundation, July 26, 2021, at https://itif.org/publications/2021/07/26/false-
promises-ii-continuing-gap-between-chinas-wto-commitments-and-its.
274 Some, including Huawei’s founder, see the development of 5G use cases (e.g., smart cars, private networks for
businesses, consumer applications) and Internet of Things technologies (e.g., sensors, wearable devices) that will run
on 5G networks as phase 2 of 5G. T hese systems and devices are expected to generate new revenues for companies.
See Yuan Yang, James Kynge, Sue-Lin Wong, and Nian Liu, “ Huawei Founder Predicts Internet of T hings Is Next US
Battle,” Financial Tim es, July 3, 2019, at https://www.ft.com/content/716181ce-9bd8-11e9-9c06-a4640c9feebb.
275 Center for Strategic and International Studies, Accelerating 5G in the United States, March 2021, at https://csis-
website-prod.s3.amazonaws.com/s3fs-public/publication/210301_Lewis_Accelerating_5G_0.pdf
?klP.hknBLh2uJBCPMkxs5_wRNzFiMbdO.
Congressional Research Service

38

U.S. Restrictions on Huawei Technologies

for open, interoperable network solutions,276 5G R&D, and domestic and international efforts to
secure the wireless communication supply chain and global networks.
Some analysts cal for U.S. government leadership, coordination, and funding for 6G, both
domestical y and international y, which they assert could help the United States lead 6G standards
and technology development.277 Experts suggest that the U.S. government should target funding
to 6G technologies through U.S. government funding of government R&D projects, R&D centers
at universities, and tax incentives to support private-sector investment in R&D focused on 6G
technologies to ensure the U.S. companies are positioned to be competitive in 6G.278 Engagement
in 6G development and standards setting could help ensure that U.S. interests and values are
represented and U.S. national security and foreign policy interests are protected in 6G standards
development organizations. In the 117th Congress, H.R. 4045 would require the FCC to create a
6G Task Force of government, industry representatives, and public interest groups to submit a
report to Congress on 6G opportunities and chal enges.
Ensuring Secure Global Networks and Communications
Some analysts encourage continued formation of international coalitions to advance security
requirements and agreements through standards development and other international
organizations (e.g., the International Telecommunication Union). International coordination on
5G security began under the Trump Administration, through such efforts as the Prague Proposals,
where 22 nations agreed on a set of security recommendations for 5G networks, 279 and the State
Department’s Clean Networks initiative.280 The Biden Administration is engaging al ies and
partners in 5G security and training and education on 5G security, and sharing approaches and
options for restricting use of untrusted equipment, including Huawei.281
Some analysts urge the U.S. government to expand282 funding and financing of secure 5G
networks global y.283 The Transatlantic Telecommunications Security Act (H.R. 3344) would
authorize the U.S. International Development Finance Corporation (DFC) to provide financing

276 For example, ORAN architecture would allow operators to move away from single-vendor network solutions and
toward open, interoperable architectures that would enable operators to select component parts from various vendors. A
security advantage would be t hat if one part posed security risks, it could be replaced with the equipment of another
vendor without replacement of the entire network.
277 Ali Khayrallah and Hugo T ullberg, “U.S. and EU Approaches to 6G,” Wilson Center, July 15, 2021, at
https://www.wilsoncenter.org/article/us-and-eu-approaches-6g.
278 David Sacks, “ China’s Huawei Is Winning the 5G Race. Here’s What the United States Should Do to Respond,”
Council for Foreign Relations (blog), March 29, 2021, at https://www.cfr.org/blog/china-huawei-5g.
279 Government of the Czech Republic, “Prague 5G Security Conference Announced Series of Recommendations: T he
Prague Proposals,” press release, March 5, 2019, at https://www.vlada.cz/en/media-centrum/aktualne/prague-5g-
security-conference-announced-series-of-recommendations-the-prague-proposals-173422/.
280 U.S. Department of State, “The Clean Network,” retrieved August 28, 2021, archived at https://2017-2021.state.gov/
the-clean-network/index.html.
281 Stu Woo and Drew Hinshaw, “U.S. Fight Against Chinese 5G Efforts Shifts From T hreats to Incentives,” Wall
Street Journal, June 14, 2021, at https://www.wsj.com/articles/u-s-fight-against -chinese-5g-efforts-shifts-from-threats-
to-incentives-11623663252.
282 Melanie Hart and Jordan Link, “T here Is a Solution to the Huawei Challenge,” Center for American Progress,
October 14, 2020, at https://www.americanprogress.org/issues/security/reports/2020/10/14/491476/solution-huawei-
challenge/.
283 Stu Woo, “U.S. to Offer Loans to Lure Developing Countries Away from Chinese T elecom Gear,” Wall Street
Journal, October 18, 2020, at https://www.wsj.com/articles/u-s-to-offer-loans-to-lure-developing-countries-away-from-
chinese-telecom-gear-11603036800?mod=article_inline; and Stu Woo and Drew Hinshaw, “ U.S. Fight Against
Congressional Research Service

39

U.S. Restrictions on Huawei Technologies

Chinese 5G Efforts Shifts From T hreats to Incentives,” Wall Street Journal, June 14, 2021, at https://www.wsj.com/
articles/u-s-fight -against -chinese-5g-efforts-shifts-from-threats-to-incentives-11623663252.
Congressional Research Service

40

U.S. Restrictions on Huawei Technologies

for 5G network development to U.S. al ies and partners in Central and Eastern Europe for
networks that do not incorporate technology that poses security risks, such as Huawei equipment.
Conclusion
The U.S. government has taken steps to remove Huawei from U.S. networks, restrict exports to
Huawei, and cease providing Huawei—an entity identified as engaging in activities contrary to
U.S. national security and foreign policy interests—with essential parts that it needs to grow and
expand global y. In the short term, Congress may focus on monitoring the implementation of
policies and restrictions to increase their effectiveness and mitigate unintended impacts on U.S.
agencies and businesses. In the long term, options for Congress include assessing the impact of
the restrictions on security of U.S. networks and supply chains, retaining or refining restrictions
against Huawei to protect foreign policy interests, and investing in U.S businesses and industries
to advance U.S. economic interests and competitiveness.

Author Information

Jill C. Gallagher

Analyst in Telecommunications Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

Congressional Research Service
R47012 · VERSION 1 · NEW
41