It has been just a couple days since President Trump and his The Office of US Trade Representatives decided to blacklist Huawei from doing any business with its US-based suppliers, contractor firms, and collaborating business partners. Google’s parent company Alphabet Inc. obliged and suspended business with the Chinese tech-giant, thus leaving Huawei’s phones as just paperweights without Google’s licensed applications and future Android updates. As the world was predicting what would be the next step in this sudden turn of tides in the year-long US-China Trade War, the US has now suddenly lifted the ban on Huawei for the next ninety days. What is President Trump up to? Is this whole ban just a way of stalling to hit Huawei’s 5G launch in Europe? Is this lift a calculated move or a hope of US-China negotiations? And will the US even care about Huawei’s business at all?
The Lift on Ban: A Consumer-Oriented Move to Avoid Backlash
Several operators in the United States rely heavily on Huawei equipment and devices for telecommunications operations. These operators also include some small business owners. Backlisting Huawei meant that these people won’t receive any support or software updates from Huawei until that ban is lifted. This would have ultimately led these operators to make urgent arrangements for replacements, which, in turn, would mean expenditure of millions of dollars for the entire US-based Huawei consumer base.
So, Mr. President gave a bargaining chip to Huawei, that the company can continue its operational support to clients in the US until next ninety days, while giving these “clients” a considerable time for deciding for new telecommunications products, thus completely removing Huawei from US market-segments in next three months. This bargaining chip does not end any intentions of Huawei ban by the US and is only a way to support existing users of Huawei who would be directly affected by this ban, as stated by Wilbur Ross, US Secretary of Commerce. Ross clearly stated that imposed ban would be in effect immediately after the period of 90 days, as it was announced by President Trump earlier. This means Trump is no mood of negotiations.
But do you really think that the US has gained the whole advantage with this ban?
US Tech Firms Loses Stocks as Trump Intends to Uphold the Ban
Huawei is highly dependent on US suppliers for components of its phones and other hardware products and gadgets. While Huawei has been designing its own modems and processors, Intel has been a prominent supplier of chipsets. On the other hand, Qualcomm has powered Honor (Huawei’s Mobile Phone Series) flagship models with its high-end processors. Micron, another US-based supplier has supported Huawei’s flash drives and has helped Huawei in offering the Corning Gorilla glass screens. Post blacklisting by Pres. Trump, Huawei has lost all its suppliers, who have cut ties with Huawei over Trump’s concerns against “national-security flaws” in Huawei devices.
The lift on the ban has not yet allowed the Chinese phone maker to buy American parts, which have backfired on the supplier’s stocks. As reported by Bloomberg, Intel’s share prices fell by 2% post-ban, while Qualcomm suffered a downtrace in share prices by 4.8%. Other suppliers like Lumentum Holdings Inc. and Broadcom has also registered downtraces in stocks. This means that the US tech suppliers to Huawei have also been affected by this abrupt decision, but, do you think that this small downtrace is a matter of concern for the US economy?
Huawei Responds Harshly
While Huawei’s suppliers continue to keep Huawei off their clientele, Huawei’s founder and current CEO, Ren Zhengfei has refused to back out against Trump’s political move over his company. Zhengfei has cleared that the US has clearly underestimated the stronghold of Huawei as a company. He even pointed out that Trump’s move would not affect Huawei’s 5G plans whatsoever. He said that “the conflict in this matter is inevitable” [no matter US has lifted the ban temporarily].
This was clear that Trump’s ban has something to do with Huawei becoming the first to offer 5G mobile technology to consumers. Trump’s think-tank at the White House is probably afraid of China taking over America’s technological dominance over the world. And now, Zhengfei has said, “…others won’t catch up with Huawei in two or three years [in terms of 5G tech]”.
While the US has decided to uphold its decision, Huawei has denied every claim of it working with Chinese intelligence, thus, declining to back out under no circumstances. As Huawei loses suppliers, will it be able to deliver its 5G promise in time?