We try to keep up with current events here at Calcbench, so we saw the news earlier this week that U.S. prosecutors have indicted Chinese telecom giant Huawei Technologies on charges of stealing intellectual property and violating trade sanctions against Iran and North Korea.

Corporate disclosure geeks that we are, immediately we then asked: What are U.S. companies disclosing about their dealings with Huawei? Could any of those companies somehow be sucked into the legal and geopolitical vortex swirling around Huawei?

Turns out, more than a few companies do have something to disclose about Huawei. Here’s what we found.

Micron Technology ($MU) received a comment letter from the SEC earlier this year, where SEC staffers were asking about Micron’s exposure to Huawei. Since Micron sells its chip components to Huawei, and Huawei stands accused of selling its products to Iran, Syria, and North Korea — how does Micron work to ensure its products don’t end up in those places?

Micron’s response on 3 July 2018—

With respect to Huawei, the Company sells products that are incorporated into some of Huawei’s mobile phone products for the consumer market, server products for the enterprise market, and other products. Micron requires that Huawei sign and abide by the Company’s “End User Certification and Agreement to End Use Restrictions”… Micron has no visibility into the sale of the millions of Huawei products that are sold worldwide. However, Huawei is required to comply with the Terms and Conditions of Sale as well as the provisions in the End-user Certification and Agreement to End Use Restrictions.

So that is one potential issue for U.S. companies: Are their export control compliance programs addressing Huawei exposure effectively? If not, that could lead to future issues with the Justice Department.

Meanwhile, Cisco Systems ($CSCO) disclosed on 6 Sept. 2018 that it agreed to pay $127 million in legal and indemnification costs to T-Mobile, which was in patent litigation with Huawei. The disclosure:

On January 15, 2016, Huawei Technologies Co. Ltd. (“Huawei”) filed four patent infringement actions against T-Mobile US, Inc. and T-Mobile USA, Inc. (collectively, “T-Mobile”) in federal court in the Eastern District of Texas. Huawei alleged that T-Mobile’s use of 3GPP standards to implement its 3G and 4G cellular networks infringed 12 patents. Huawei’s infringement allegations for some of the patents were based on T-Mobile’s use of products provided by us in combination with those of other manufacturers. T-Mobile requested indemnity by Cisco with respect to portions of the network that use our equipment. On December 22, 2017, the Eastern District of Texas court dismissed Huawei’s four lawsuits after the parties reached settlement, and T-Mobile’s indemnity request was subsequently resolved.

During fiscal 2018, we recorded legal and indemnification settlement charges of $127 million to product cost of sales in relation to these matters. At this time, we do not anticipate that our obligations regarding the final outcome of the above matters would be material.

Qualcomm ($QCOM) lists Huawei as one of its customers (along with ZTE Corp., another Chinese telecom giant already sanctioned by the feds in 2017):

Further, the majority of the leading handset and other wireless device companies (including Huawei, LG, Microsoft, Oppo, Samsung, Sony, vivo, Xiaomi and ZTE) have royalty-bearing licenses under our patent portfolio…

Skyworks Solutions ($SWKS) also lists Huawei as a customer, and in Skyworks’ segment reporting discloses that Huawei accounted for 10 percent of the company’s revenue in 2017 — that is, roughly $365 million of Skyworks’ total $3.65 billion in revenue that year.

We’re more curious about whether corporate disclosures related to Huawei (or ZTE, for that matter) will change in the future. For example, Micron isn’t the only company that sells goods to either of those companies. If the SEC starts asking more questions about export controls, U.S. filers will need to respond with more information. If companies rely heavily on Huawei for revenue, how might they respond if U.S.-China relations strain those business ventures?

You can keep an eye on such disclosures using our Interactive Disclosure Viewer, of course. We suspect we’ll see more of them in the future.