U.S. lawmakers want former Huawei unit added to economic blacklist

WASHINGTON (Reuters) -A group of 14 Republican lawmakers in the U.S. House of Representatives on Friday asked the U.S. Commerce Department to add former Huawei unit Honor Device Co to the government’s economic blacklist.

The lawmakers led by Republican Michael McCaul, the ranking member of the House Foreign Affairs Committee, noted in a letter that Honor was divested from Huawei, which was added to the U.S. Entity List in May 2019. Being added to that list bans companies from buying parts and components from U.S. companies or using American technology without U.S. government approval.

The Republican lawmakers argued that Honor was spun off “in an effort to evade U.S. export control policies meant to keep U.S. technology and software out of the hands of the Chinese Communist Party (CCP).”

The letter cited analysts saying that “selling Honor gave it access to the semiconductor chips and software it relied on and would have presumably been blocked had the divestiture not gone through.”

A U.S. Commerce Department spokesman said the agency appreciates “the perspective of these members of Congress.” He noted the department “is continually reviewing available information to identify potential additions to the Entity List.”

The Chinese Embassy in Washington, Honor and Huawei did not immediately respond to requests for comment.

Huawei in November 2020 said it was selling its budget brand smartphone unit, Honor, to a consortium of over 30 agents and dealers.

Reuters reported in January the all-cash sale fetched more than 100 billion yuan ($15.5 billion) and was aimed at keeping the budget brand alive, “as sanctions slapped on Huawei by the United States had hampered the unit’s supply chain and cut off the company’s access to key hardware like chips and software.”

Washington says Huawei is a national security threat, which Huawei has repeatedly denied.

In January, Honor said it had formed partnerships with chip makers such as Intel Corp and Qualcomm Inc and launched a new phone.

The lawmakers said “the same concerns about technology exports to Honor when it was part of Huawei should apply under its current state-backed ownership structure.”

Reporting by David Shepardson in WashingtonEditing by Jonathan Oatis and Matthew Lewis