• Uncategorised

Huawei vs. U.S.: As trade war escalates, tech companies sit in the crosshairs

Huawei has been placed on the U.S. Department of Commerce’s “Entity List,” prohibiting the company from acquiring parts and components from U.S. companies without the approval of the federal government. This occurred on May 15, and the move is thought to be leverage in the ongoing trade war between the U.S. and China.

The situation continues to escalate and alter by the day, with more questions arising. Here’s what you need to know.

China denies ties, trade war deal is key

The spokesman for the Chinese foreign ministry has responded to accusations of Huawei’s ties with the Chinese government, and the potential for espionage. Lu Kang is quoted as saying:

“Recently, some U.S. politicians have continually fabricated rumors about Huawei but have never produced the clear evidence that countries have requested.” He continued, stating the message was provoking suspicion in the U.S and, “instigating opposition.”

The first indication Huawei’s situation may alter when the trade war between China and the U.S. ends came from comments made by U.S. President Donald Trump. “If we made a deal, I could imagine Huawei being possibly included in some form or some part of it,” he said.

Companies respond

Google was first to comply with the U.S. government ruling. Officials told Reuters the decision will make it difficult, if not impossible, for Huawei to sell some products due to its reliance on U.S. suppliers. However, to avoid unintended negative consequences to U.S. companies who have been dealing with Huawei, the Commerce Department soon rolled back some of its earlier restrictions on the Chinese telecom firm, according to a Reuters report.

In revising its policy temporarily for 90 days, the U.S. government will allow Huawei to purchase American-made parts and components so that it can maintain existing networks and update existing smartphones. The company is still prohibited from purchasing U.S.-made goods for new products without license approvals — which will likely be denied. The short-term reprieve has been implemented as a temporary general license, in effect until August 19.

A number of significant chipmakers, including Qualcomm and Intel, have supposedly told their employees that they will no longer be supplying Huawei. While Huawei creates its own processors for its smartphones, the company still requires hardware from other manufacturers. Huawei has been stockpiling chips in advance of such an outcome though, and according to Bloomberg, the company had built up a three-month stockpile ahead of the ban.

Even tiny U.S. firms are starting to feel the squeeze as the consequences of the trade war fan out to vast rural areas in the U.S. heartland, whose wireless companies use Huawei components. According to a report by The New York Times, not only are such small companies facing the prospect of being forced to abandon expansion plans in their severely underserved areas, the companies currently using Huawei components fear severe economic impact, as the Federal Communications Commission (FCC) has proposed ending subsidies to carriers using Huawei or ZTE parts.

To date, the Chinese telecom giant sells equipment to about one-quarter of small U.S. wireless firms. According to the Rural Wireless Association, a group representing 55 small carriers, the government’s ban will cost its members between $800 million and $1 billion to replace networking equipment from the Chinese firms, which have been rural suppliers for the better part of a decade, and sometimes charged as much as 30% less than competitors. If the small carriers must ditch that equipment, some may not be able to survive. To mitigate that prospect, a new bill in the Senate proposes to set aside some $700 million in grants to carriers forced to replace components as a result of the new ban.

ARM, the U.K.- based company that designs the architecture on which most of the world’s mobile and computer chips are produced, has issued instructions to cease working with Huawei. This first came according to leaked documents obtained by the BBC, but has since been confirmed by The Verge.

The instruction doesn’t stop Huawei from making chips now, but it may hurt future chip design and production. Huawei produces its own mobile processors, named Kirin, under a separate arm of the company called HiSilicon. It works closely with ARM on the development of these chips, just like Apple, Qualcomm, and Samsung.

ARM has since released a statement, in which it stated: “ARM is complying with the latest restrictions set forth by the U.S. government and is having ongoing conversations with the appropriate U.S. government agencies to ensure we remain compliant. ARM values its relationship with our long-time partner HiSilicon and we are hopeful for a swift resolution on this matter.”

Huawei’s woes aren’t just limited to manufacturing companies. According to a report from [email protected], Amazon Japan has stopped direct sales of Huawei’s latest flagship range, including the Huawei P30 and the P30 Pro. When the report first broke on May 22, Amazon Japan’s product pages for the Huawei P30 Lite and P30 with bundled extras show a simple “out of stock” message, with no plans for restock.

It’s worth pointing out that this alarm may be overblown. While those product pages are indeed out of stock, pages for the P30 Pro and P30 still exist with apparent stock, though numbers are low. However, Amazon has added a new line to the product descriptions of each phone. According to Google Translate, the line reads: “There are serious concerns about this product such as OS (Operation System).” This refers to the ongoing concerns that Huawei’s phones could be locked out of future Android updates and Google’s software suite.

Huawei response

Honor, sister company to Huawei, released this statement to Digital Trends soon after the ban:

“Huawei has made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefitted both users and the industry. Huawei will continue to provide security updates and after-sales services to all existing Huawei and Honor smartphone and tablet products, covering those that have been sold and that are still in stock globally. We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally.”

A Twitter feed from the company called “Huawei Facts” cited an article in Asia Times on May 20 arguing that the bans will not slow Huawei down. Indeed, it’s “full steam ahead.”

Huawei has also issued another statement, saying the ban will do more harm than good:

“This decision is in no one’s interest. It will do significant economic harm to the American companies with which Huawei does business, affect tens of thousands of American jobs, and disrupt the current collaboration and mutual trust that exist on the global supply chain. Huawei will seek remedies immediately and find a resolution to this matter. We will also proactively endeavor to mitigate the impacts of this incident.”

What does it mean to you?

Currently, if you own a Huawei phone, it will work in exactly the same way as it has been doing. Access to the Google Play Store, Play Protect, and other such apps will not be revoked, as confirmed in a tweet from the official Android Twitter account. But it’s rumored that existing Huawei devices are now cut off from future Android updates, which might cause them to lose Play certification. This could make using the Huawei Mate 20 Pro in the Android Q beta a risky choice.

Huawei’s future

The future may be very different for Huawei, should the situation not be resolved. Without the correct Google licenses, which it cannot purchase under the ban, Huawei will lose access to updates for the Android mobile operating system.

Future Huawei devices on Android will also not be able to offer services such as the Google Play Store nor apps such as Gmail, Chrome, and YouTube. That is, unless the situation is resolved. Huawei will still be able to use the Android Open Source Project (AOSP), the open-source public version of Android. But without access to Google’s proprietary apps and services, staying on Android will not make much sense on devices sold outside China.

Huawei has been working on an alternate mobile operating system, a South China Morning Post report from last year claimed, as there were concerns that the company would lose its Android license from Google. The plan was dubbed a “worst-case scenario” — but it appears Huawei may have no choice but to proceed with it in the near future. The operating system is likely similar to that installed on its phones in China, where Google services are banned.

The ban is bad news for phone lovers, as the Chinese manufacturer has been releasing top-notch smartphones such as the P30 Pro, the Mate 20, and the Mate 20 Pro, and although the phones are not officially for sale in the U.S., fans have been able to import them. The U.S. government has previously committed to similar actions against other Chinese companies, most notably in the ZTE ban last year. That ban was eventually lifted, which should give Huawei fans some hope, but it’s no guarantee this situation will play out in the same way.

Updated on May 25, 2019: Added information on how the ban is affecting wireless companies in U.S. rural areas.

Updated on May 24, 2019: Updated with U.S. and Chinese government comments on the situation.

Editors' Recommendations

You may also like...