Targeting the Chinese tech giant Huawei’s bottom-line may end up hurting the US and international companies.
In a move which could have serious consequences on the US-China trade relations, the United States has banned its companies from selling parts to Huawei.
The new regulations will bar Huawei from acquiring components and technology from US firms without government approval.
Huawei and its 70 affiliates are being added to the US Commerce Department’s “entity list”. The move makes it difficult for the firm to sell certain products,due to reliance on US suppliers.
US President Donald Trump Has Blacklisted Huawei Over Spying Fears
The dramatic move comes as the Trump administration has aggressively lobbied other countries not to use Huawei equipment in next-generation 5G networks. It comes just days after the Trump administration imposed new tariffs on Chinese goods amid an escalating trade war.
US officials have long feared the Chinese government could use Huawei’s equipment to spy on Americans.
Ramifications of the Huawei Ban
Blacklisting Huawei is likely to have ramifications beyond the company itself. Not only might it disrupt Huawei’s business, but it could also hurt its US suppliers.
Officials in China said US aggressiveness could hurt trade talks. It appeared to have hit an impasse in the past week as Washington hiked tariffs on Chinese goods and Beijing retaliated with higher duties on US products.
I bet Huawei will beat Apple very soon because of the best “free advertisement” by Trump, who declared national emergency to ‘ban #Huawei’ from US tech networks. Why? Have a look at how Huawei embarrassed Apple. pic.twitter.com/MrS0Xk2zbn
— Lijian Zhao 赵立坚 (@zlj517) May 20, 2019
Huawei’s Share Prices Fall
Meanwhile, share prices for Huawei’s US suppliers fell due to fears it would be forced to stop purchases after the ban takes hold.
Huawei said in a statement that losing access to US suppliers “will do significant economic harm to the American companies” and affect “tens of thousands of American jobs”.
Google Cuts Ties With Huawei Amid Ban
US internet giant Google said it was beginning to cut some ties with Huawei in light of the US blacklisting.
Huawei will immediately lose access to updates to the Android operating system. The next version of its smartphones outside of China will also lose access to popular applications and services including the Google Play Store and Gmail app
This effectively means no further Android security updates for devices new and old, including the recent P30 and P30 Pro, Mate 20 Pro, and many more.
For Huawei users' questions regarding our steps to comply w/ the recent US government actions: We assure you while we are complying with all US gov't requirements, services like Google Play & security from Google Play Protect will keep functioning on your existing Huawei device.
— Android (@Android) May 20, 2019
Update 1: The U.S. Commerce Department has created a temporary 90-day license that restores Huawei’s ability to provide software updates to existing handsets.
Update 2: Huawei confirms it has a backup Operating System in case it’s cut off from Android. It’s years in the making, but the OS might be more necessary than ever.
Update 3: Huawei is all set to showcase its own operating systems by the end of 2019.
JUST IN: Huawei set to have its own operating systems ready for smartphones and laptops by the end of this year
— The Spectator Index (@spectatorindex) May 23, 2019