New US trade restrictions for security reasons will block doing business with Huawei except with a government license.
Huawei’s plan B
Richard Yu, Huawei’s CEO said previously that the company was preparing for the clamp down by the Trump administration with the plan for developing its own operating system and other technology, its plan B. The US has consistently claimed that Huawei the world’s second largest smart phone maker after Samsung has secret ties to the Chinese state. However, the US has yet to provide hard evidence of this. A recent Digital Journal article discusses technology security risks and Huawei.
Huawei has yet to publicly confirm that it is launching its own operating system which has been under development for years. However, Chines media it was planning its release this autumn. Yu made his announcement in a private messaging group WeChat according to local media.
US government grants a 90 day temporary licence
The US government granted Huawei a temporary licence to trade with Google and other companies until 19 August. The temporary license is said to be intended to minimize the disruption the government decision will cause to Huawei smartphone owners around the globe. Another recent Digital Journal article explores the problems the US and Google decision will cause for Huawei.
Reng Zhengfei, Huawei founder said though : “The US 90-day temporary license does not have much impact on us, we are ready..Huawei’s 5G will absolutely not be affected. In terms of 5G technologies, others won’t be able to catch up with Huawei in two or three years.”
Zhengei also noted that its other businesses will not be hurt by the ban and that the US government was very much underestimating the strength of the company.
Trump’s decision will hurt some US tech companies
While in the short term Huawei may be hurt by the Google ban and Trump decision in the longer term it will hasten Huawei’s and other Chinese companies drive to develop their own cutting edge technology. It will also severely hurt some US companies which make considerable revenue from sales of parts and licensing their technology to Huawei. Some US chipmakers some of whom are already in dire straits will be hard hit by the ban.
A recent article notes: “The U.S. move escalates trade-war tensions with Beijing, but also risks making China more self-sufficient over time. Shares of U.S. tech companies slid on Monday as investors fretted the move against Huawei could crimp sales for companies, especially chipmakers, with revenue heavily tied to China.”
The US move, no doubt part of continuing trade war between the two countries, represents a lose-lose situation and in the longer term the US may lose the most rather than getting the trade deal with China it hopes such measures will bring.
