The US-China trade has ended up putting Huawei’s smartphone business in jeopardy. Last week, an executive order from President Trump led Huawei and 60+ other Chinese companies to be put on an Entity list. This meant that no U.S. company could indulge in any form of trade with them. Among other things, this has led Huawei to lose access to Android and the Google Play suite of apps and services.
Following the decision from the U.S. government, Google has suspended its business activities with Huawei. While this will not affect existing Huawei smartphones on the market, it does mean that they will not be receiving any security or OS updates until this issue is resolved. The future of all Huawei phones due to be released outside of China is also unclear as of now. Huawei’s smartphone business in China will not be affected much by this move since it sells smartphones without Google Play in the region and the company continues to have access to the AOSP version of Android.
Alphabet Inc’s Google has suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing, a source familiar with the matter told Reuters on Sunday, in a blow to the Chinese technology company that the U.S. government has sought to blacklist around the world.
Making matters worse for Huawei, other major U.S. tech giants like Qualcomm, Intel, and Broadcom have also informed Huawei that they will not be providing them with software or hardware products and services until further notice. The move is definitely going to hamper Huawei’s networking and smartphone business despite the company already anticipating such a move from the U.S. government months ago. The move will also negatively affect U.S. companies since they rely on Huawei for a sizeable business.
Huawei has already created a stockpile of chips and other components that will last for around three months. It has also started designing its own chips so as to reduce its reliance on U.S. tech firms. Despite such planning from the company though, there’s no doubt that its business is going to be affected. 5G rollout in China will be greatly hampered due to this and the future of Huawei’s smartphone business outside of China will be stuck in limbo.
If this trade ban between Huawei and other U.S. companies is not lifted soon, the Chinese government might take a similar decision in retaliation. If that happens, it will affect all major U.S. tech companies since their hardware supply-chain is located in China. This includes Apple as well whose biggest supply-chain partner is Foxconn having a number of factories and a massive workforce in China.[Via Bloomberg, Reuters]