US tech stocks are rebounding after Google was granted a 90-day extension to continue to work with Huawei, in an easing of stringent U.S. restrictions on the Chinese telecom equipment and phone maker.
The U.S. Commerce Department blocked Huawei Technologies from buying U.S. goods last week, saying the firm aides Chinese intelligence agencies and violated sanctions on Iran.
On Monday, the Commerce Department granted Huawei a license to buy U.S. goods until August 19 to maintain existing telecoms networks and provide software updates to Huawei smartphones, a move intended to give telecom operators that rely on Huawei time to make other arrangements.
US tech stocks rose on Tuesday on news of the grace period. Chipmakers rallied, with Qualcomm gaining 2.1 per cent.
The tech-heavy Nasdaq Composite was up 1.2 per cent in mid-morning trading. Google shares were up 0.95 per cent, after opening down on Monday after news of the trading ban.
On Monday, the Commerce Department granted Huawei a license to buy U.S. goods until August 19, allowing Google to continue sending updates to Huawei phones until then
Major European stock markets rose and Chinese indices gained more than 1 percent.
In Europe, the tech sector rose 1.49 per cent after losing almost 3 per cent on Monday, as chipmakers AMS AG of Austria, Franco-Italian STMicroelectronics and Germany's Infineon all gained.
Huawei is still prohibited from buying American-made hardware and software to make new products without further, hard-to-obtain licenses.
China and the U.S. increased import tariffs on each other's goods over the past two weeks after President Donald Trump said China had reneged on earlier commitments made during months of negotiations.
Huawei founder Ren Zhengfei on Tuesday told Chinese state media that the reprieve bore little meaning for the company as it had been making preparations for such a scenario.
'The U.S. government's actions at the moment underestimate our capabilities,' Ren said in an interview with CCTV, according to a transcript published by the Chinese state broadcaster.
The U.S. controls 'will have no impact within this company' and none on development of next-generation telecom technology, Ren said. He said some low-end business might be affected.
Chip experts have called out Huawei on its claims that it could ensure a steady supply chain without U.S. help, saying the technology it buys from American companies would be 'hard to replace'.
Nearly 16 percent of Huawei's spending on components in 2018 went to U.S. firms including Qualcomm, Intel and Micron Technology, analysts said.
A five-day view of Google's share prices shows the price rebounding in Tuesday trading
Huawei founder Ren Zhengfei (seen in file photo) said on Tuesday that the U.S. controls 'will have no impact within this company'
Monday's temporary license is likely to allow companies such as Google to continue providing service and support, including software updates or patches, to Huawei smartphones that were available to the public on or before May 16.
'Keeping phones up to date and secure is in everyone's best interests and this temporary license allows us to continue to provide software updates and security patches to existing models for the next 90 days,' a Google spokesperson told CNBC in an email on Tuesday.
The license also allows Huawei to engage in the development of
