US Government’s Huawei Ban Will Probably Go Into Effect Next Mon
Chinese technology giant Huawei was the second-largest smartphone maker in the world at this time last year, but its fortunes have taken a downturn in 2019. The US government hit the firm with a trade ban last spring, but a temporary exemption allowed US companies to continue working with it. Now, the government has signaled that there will be no more extensions — the export ban is likely to go into effect soon.
In May of this year, the US Commerce Department added Huawei to its “entity list.” The people and businesses on that list are considered a threat to US interests, and as such, US companies cannot provide technology or other resources to them. The government granted US firms a temporary 90-day reprieve from the trade ban to help them transition their business activities away from Huawei. Huawei got that reprieve extended in August by another 90 days.
The current exemption expires on November 19th, and government officials say there most likely will not be another. That would mean all US companies have to sever ties with Huawei in just a few weeks, and that is sure to devastate Huawei’s business. The company reported a small impact on its business in Q2, but the ban only happened a few weeks before the end of that quarter. We expect its Q3 numbers will be much, much worse.
Even without the full ban in effect, Huawei was unable to pursue any new business deals with US companies like Google. Therefore, its new Mate 30 Android phone is launching without Google apps and services. Things will only get worse when the exemption expires. While Huawei has more in-house technology than most smartphone makers, it still relies on US technologies like Bluetooth, Wi-Fi, and ARM chip designs. It may also be unable to certify Android updates for existing smartphones in the future. The US has also suggested it will punish allied nations that use Huawei telecom equipment for 5G networks.
Google has been lobbying for a special license to continue working with Huawei on Android devices. It’s not the only company looking for such a license, either. However, the government has thus far failed to process any of those applications. It looks like Huawei is going to have to limp along as the US-China trade war continues to rage.
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