Chinese vendor Huawei Technologies announced plans to move the company’s current research and development center in the U.S. and relocate to Canada, The Globe and Mail reported the company’s founder and CEO Ren Zhengfei as saying.
Ren revealed the initiative in an interview with the Canadian newspaper, as the Chinese company seeks to reduce its exposure in the U.S after being placed on a trade blacklist by the U.S. Commerce Department in May over security concerns.
The newspaper reported that Huawei spent $510 million on the operation of the R&D facility in 2018, but had cut its workforce from 650 to 250 due to the trade ban. In the U.S., Huawei currently have staff carrying our research activities in California, Texas and Washington states.
Ren also said Huawei plans to manufacture some 5G equipment outside of its home market China. As part of the effort, Huawei could establish a factory in Europe, the executive said.
Last week, Reuters reported that the U.S. government was studying the possibility to expand its power to stop more foreign shipments of products with U.S. technology to Huawei, amid frustration that blacklisting the company has failed to cut off its key supplies.
The blacklisting of Huawei by the Department of Commerce allowed the U.S. government to restrict sales of U.S.-made goods to the Chinese firm. This decision effectively banned the company from buying parts and components from U.S. companies without U.S. government approval. Under the order, Huawei will need a U.S. government license to buy components from U.S. suppliers.
The Department of Commerce recently confirmed it will start to issue some licenses for U.S. firms to sell products to the Chinese vendor.
However, Reuters noted, under current regulations, key foreign supply chains remain beyond the reach of U.S. authorities, which allows Huawei to secure key components for the production of mobile phones and 5G gear.
The new rules under consideration would allow U.S. authorities to regulate sales of non-sensitive items, such as standard cell phone chips, made abroad with U.S.-origin technology, software, or components to Huawei, according to the report.
The Commerce Department and sister agencies are currently studying to expand a regulation known as the De minimis Rule, which dictates whether U.S. content in a foreign-made product gives the U.S. government authority to block an export.
Government officials also may decide to expand the so-called Direct Product Rule, which subjects foreign-made goods that are based on U.S. technology or software to U.S. regulations, according to the report.