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The Morning Risk Report: Biden Administration Considers Cutting Off Huawei From U.S. Suppliers
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Good morning. The Biden administration is considering entirely cutting off Chinese telecommunications giant Huawei Technologies Co. from U.S. suppliers over national-security concerns by tightening export controls targeting the firm, according to people familiar with the matter.
The move—should the administration move forward—would mark the latest salvo in the high-stakes clash between the world’s two largest economies as U.S. policy makers seek to counter China’s industrial policy which they say threatens Western interests. Here's what you need to know:
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The background: The Trump administration in 2019 added Huawei to the Department of Commerce’s “Entity List,” a roster of foreign companies deemed to be national-security threats. However, the Commerce Department later agreed to grant licenses to U.S. companies allowing them to sell technology to Huawei as long as it wouldn’t put national security at risk.
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The news: The Biden administration is now considering no longer granting such licenses, although no decision has been made, the people familiar said. U.S. officials have signaled to Qualcomm Inc. and Intel Corp., which continue to supply Huawei, that this is a good time to wind down their sales to the Chinese company, said one of the people familiar with the matter.
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The nitty gritty: One of the ideas under consideration is to use more stringent controls that not only ban direct dealings with the company, but that also prohibit exports to other companies and intermediaries who then supply Huawei, according to this person. That policy has the potential to suppress Huawei’s dealings outside the U.S. given the extent U.S. components are used internationally.
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The upshot: While the direct market impacts of an outright ban on any exports to Huawei may be limited because of Huawei’s waning U.S. dealings, it could signal further deterioration in the U.S.-China relationship.
Meanwhile, the Biden administration is turning to India for help as the U.S. works to shift critical technology supply chains away from China and other countries that it says use that technology to destabilize global security.
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Above the Clouds: Taming Multicloud Chaos
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As enthusiasm for the latest cloud services and tools has grown, so has the number of platforms businesses are supporting. Could metacloud be the answer to this tangled web of cloud tools? Read More ›
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WSJ Pro Sustainable Business Webinar
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As more companies introduce or expand sustainability programs, they are often unclear on which initiatives deliver the best results. Join us on Feb. 2 for a two-part webinar featuring executives discussing programs that have improved the sustainability standing of their companies. Register here.
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Elon Musk has said that he intends to comply with the EU’s new rules governing social media.
PHOTO: BENJAMIN FANJOY/ASSOCIATED PRESS
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Elon Musk's companies face off with regulators. A top European Union official told Elon Musk on Tuesday that Twitter Inc. will have to do more over the coming months to prepare for the bloc’s new social-media regulations.
Thierry Breton, the EU’s commissioner for the internal market, told Mr. Musk during a video call that there were only a few months left before major online platforms like Twitter will have to be fully compliant with the Digital Services Act. Mr. Musk has previously said that he intends to comply with the EU’s new rules.
Meanwhile, Tesla Inc. confirmed the U.S. Justice Department has asked for documents related to the electric-car maker’s advanced driver-assistance system after opening a criminal investigation.
The Austin, Texas-based company, in a regulatory filing released Tuesday, said the DOJ asked for information about Tesla’s Autopilot system, which helps drivers with tasks such as steering and maintaining a safe distance from other vehicles on the highway.
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Celsius used customer funds, examiner finds. Celsius Network LLC used customer funds to cover shortfalls in its obligations to pay lofty yields and to prop up the value of its CEL token while some firm insiders were cashing out, according to an examiner’s probe into the crypto lender’s practices before its collapse last year.
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Celsius sold customers’ Ethereum and bitcoin to fund purchases of the firm’s proprietary CEL token since it wasn’t earning enough yield through its various investment activities to cover obligations under its flagship customer offering, according to the report by Shoba Pillay, the examiner appointed to probe the firm’s business practices.
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The head of the U.S. Food and Drug Administration proposed consolidating the leadership of the food side of the agency Tuesday, in response to criticism of its slow response to the baby formula shortages and other food safety concerns.
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Farmington State Bank, which mainly served farmers in Washington state, got a name change and new target customers after it was bought. PHOTO: ALAMY
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Tiny bank gets tangled with FTX. When Jean Chalopin applied to buy a tiny bank in Washington state nearly three years ago, he made modest promises to bring not-so-new innovations such as ATM cards to a place with few local banking options.
Farmington State Bank’s business plan wouldn’t change, Mr. Chalopin, a onetime TV and film producer who co-created the “Inspector Gadget” cartoon, assured federal regulators in documents viewed by The Wall Street Journal.
But it wasn’t long before the bank got a new name, Moonstone, and new target customers in the high-risk cryptocurrency and cannabis industries. It also got a new shareholder: Sam Bankman-Fried’s crypto-trading firm, Alameda Research LLC.
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China rule threatens U.S. solar. A plan by China to restrict exports of key solar manufacturing technology could delay attempts to build up a domestic solar supply chain in the U.S., industry experts say.
China’s Ministry of Commerce and Ministry of Science and Technology are considering adding advanced technology used in the production of ingots and wafers, some of the building blocks of solar panels, to a list of technologies that are subject to export controls.
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UPS posted a stronger-than-expected profit for the most recent period.
PHOTO: DAVID KASNIC FOR THE WALL STREET JOURNAL
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UPS prepares for slowdown. United Parcel Service Inc. is girding its business against a slowdown in global delivery volumes as it advised that annual revenue could decline for the first time since 2009. The Atlanta-based delivery company said Tuesday that it expects revenue of between $97 billion and $99.4 billion in 2023, down from $100.3 billion last year.
The outlook comes after UPS posted a surprise decline in fourth-quarter revenue after delivering fewer items during the holidays than a year earlier. Softness in China trade lanes hurt the top line from UPS's international segment, the company said. Average daily package volume fell 4.5% in the December quarter, although revenue earned per package rose 5.2%.
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PagerDuty CEO Jennifer Tejada celebrated her company’s first day of trading on the floor of the New York Stock Exchange in April 2019. PHOTO: RICHARD DREW/ASSOCIATED PRESS
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CEO quotes MLK in layoff email. The chief executive of a San Francisco startup apologized for quoting Dr. Martin Luther King Jr. in a layoff announcement, saying her email to employees was “inappropriate and insensitive.”
Jennifer Tejada, chief executive at PagerDuty Inc., a cloud computing company, told staff last week she was cutting 7% of employees. PagerDuty is one of a number of companies that have recently delivered layoff news through email and have apologized for the downsizing.
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Anchorage Digital Bank names new CCO. Anchorage Digital Bank NA has hired Mark duBose as its chief compliance and risk officer. He succeeds Jennifer Lee, who served as Anchorage Digital’s head of compliance for about three years and recently resigned.
Mr. duBose previously worked as chief risk and compliance officer for Centre Consortium, a joint venture formed in 2018 by Circle Internet Financial Ltd. and Coinbase Global Inc. to create a stablecoin called USD Coin.
Anchorage Digital also promoted its former Chief Risk Officer Rachel Anderika to chief operating officer and hired Dustin Palmer as its interim Bank Secrecy Act officer to focus on anti-money-laundering issues.
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Dartmouth hires new compliance chief. Dartmouth College has tapped former Eaton Corp. compliance executive Alejandro Diaz as its first chief compliance officer.
Mr. Diaz, who began working at the Hanover, N.H.-based institution on Monday, most recently worked at Temple University in Philadelphia, where as its first compliance chief he helped establish a whistleblower hotline and investigations process as well as a universitywide enterprise risk management program.
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