Santa Clara — The US-based research arm of China’s Huawei Technologies, Futurewei Technologies, announced worker layoffs on Monday, according to two Futurewei employees.

The layoffs come about two months after the US government put Huawei on a trade blacklist, making it illegal for its US subsidiary to transfer sensitive technologies to its parent. The blacklist also restricts Huawei from purchasing products from US technology companies.

Futurewei was set up in part to work closely with US universities and researchers.

One employee said the layoff target was to remove 70% of the 850 Futurewei workers. That employee said a layoff list had been sent from Huawei’s headquarters in China, and aimed to eliminate any open-source projects, projects related to near-term Huawei products, and any research and development in critical technology.

A second Futurewei employee confirmed layoffs were happening Monday but declined to provide details.

Huawei declined to comment.

Charges filed

Huawei is among the world’s largest telecommunications equipment manufacturers. The US commerce department in May placed the firm on its “entity list” of organisations that pose security risks. The justice department earlier filed charges against the firm alleging theft of trade secrets and other crimes.

Futurewei has offices in Silicon Valley and the greater Seattle, Chicago and Dallas areas. Futurewei has filed more than 2,100 patents in such areas as telecommunications, 5G cellular networks, and video and camera technologies, according to data from the US patent and trademark office.

The Wall Street Journal reported earlier in July that layoffs were being planned.

The first Futurewei employee said work had come to a standstill since Huawei was blacklisted.

“On the 17th of May, Huawei asked everyone at Futurewei to upload everything to the Huawei cloud, right before the ban took effect,” that employee said. “After that basically Futurewei has stopped doing any work — almost stopped everything.”

Elsewhere, Reuters reported that Huawei secretly helped North Korea build and maintain its commercial wireless network, the Washington Post reported on Monday, citing sources and internal documents.

The Chinese telecommunications company partnered with a state-owned Chinese firm, Panda International Information Technology , on a number of projects in North Korea over at least eight years, the Post reported.

Sources briefed on the matter confirmed the commerce department has been investigating Huawei since 2016 and is reviewing whether the company violated export control rules in relation to sanctions on North Korea.

Such a move would raise questions of whether Huawei, which has used US technology in its components, violated American export controls to furnish North Korea with equipment.

Senators Chris van Hollen and Tom Cotton said the “revelation underscores (Huawei’s) ties to North Korea and its serial violations of US law”.

They noted that a defence reauthorisation bill under consideration in the US Congress contains new “provisions to better enforce sanctions on Pyongyang by making it clear that any company that does business with North Korea — like Huawei reportedly did — will face American sanctions”.

The US put Huawei on a blacklist in May, citing national security concerns. The move banned US companies from selling most US parts and components to Huawei without special licences, but President Donald Trump said in June that American firms could resume sales in a bid to restart trade talks with Beijing.

Huawei did not immediately respond to a request for comment, but said told the Washington Post it had “no business presence” in North Korea. It was not immediately possible to reach the Panda Group.

Huawei and Panda vacated their Pyongyang office in the first half of 2016, the newspaper reported.