WASHINGTON—The Trump administration is considering changing U.S. regulations to allow it to block shipments of chips to Huawei Technologies from companies such as Taiwans TSMC, the worlds largest contract chipmaker, two sources familiar with the matter said.
New restrictions on commerce with Chinas Huawei are among several options to be considered at high-level U.S. meetings this week and next. The chip proposal has been drafted but its approval is far from certain, one of the sources said.
The measure would be a blow to the worlds no. 2 smartphone maker as well as to TSMC, a major producer of chips for Huaweis HiSilicon unit and mobile phone rivals Apple Inc. and Qualcomm Inc.
“What theyre trying to do is make sure that no chips go to Huawei that they can possibly control,” the second source said.
The United States has said it has evidence that Huawei gear in next generation 5G networks can be used for spying by the Chinese communist state. Huawei has repeatedly denied the claim.
To target global chip sales to Huawei, U.S. authorities would alter the Foreign Direct Product Rule, which subjects some foreign-made goods based on U.S. technology or software to U.S. regulations.
Reuters reported possible changes to that rule in November.
Under the draft proposal, the U.S. government would force foreign companies that use U.S. chipmaking equipment to seek a U.S. license before supplying Huawei—a major expansion of export control authority that could anger U.S. allies worldwide.
The U.S. Commerce Department declined to comment on the proposal.
But a Commerce spokesman said recent U.S. charges against Huawei, including conspiring to steal trade secrets, “reaffirm the need for caution in considering license applications. The U.S. continues to have major concerns about Huawei.”
Huawei did not respond to requests for comment.
A spokeswoman for TSMC said the company does not answer “hypothetical” questions and does not comment on individual customers.