USA blacklists Huawei

Author: Marcus Schilling
Date: 22.05.2019

Business still allowed for 90 days

Last Friday, the US government blacklisted the Chinese telecommunications group Huawei. This list prohibits US companies from doing business with the companies concerned without the government’s permission.

Now the USA has lifted the ban out of fear of technical problems, because Huawei’s technology is installed in many local mobile phone networks. According to this, the Chinese company may continue to buy from American companies – but only for the short-term of 90 days.

Huawei is allowed to continue to operate its existing networks and provide software updates for smartphones – even for its own ones – as long as this is the case. During this period, telecommunications providers that use the Chinese group’s equipment should enter into other agreements.

Avoidance of unwanted side effects

“To cut a long story short, this permission means that existing smartphones and rural broadband networks will continue to work,” said Trade Minister Wilbur Ross. The Ministry of Commerce will investigate whether the ban will be postponed again after the 90-day period.

The US Department of Commerce wants to avoid unwanted side effects, comments lawyer and ex-ministerial employee Kevin Wolf: “This is probably intended to prevent the Internet, computers and mobile phone systems from collapsing. It’s not a surrender, it’s a clean-up.”

The postponement does not apply to new products, for which licenses are still required. New smartphone models may no longer be sold by Huawei with pre-installed Google services. This means that current users can have their smartphones supplied with updates and apps from Google for another three months.

US companies also affected

In addition to the Chinese telecommunications group itself, suppliers and customers are also hard hit. The stock market prices of chip suppliers fell drastically. US companies have also been disadvantaged: Huawei invested 70 billion dollars in the purchase of parts in 2018 – 11 billion of which went to US companies such as Qualcomm, Intel and Micron.

Huawei did not comment on the sanctions. Company founder Ren Zhengfei, however, spoke to the Chinese state media, and said that the US government underestimated Huawei. No company will be able to catch up with Huawei’s 5G technology in the next two to three years.

The company can manufacture its own chips: “We can build the same chips as US suppliers,” says Ren. At the same time, he stressed that this did not mean that the company no longer wanted to buy US chips. In “peaceful times”, half of the chips used are sourced from the USA – the rest are made by the company itself. Furthermore, the delivery of the equipment for the 5G data radio would not be disadvantaged.

Conversations with Google

Regarding Android’s ban, Ren announced that he was already negotiating a solution with Google. The tech group is a “good company” that acts responsibly.

Huawei is the second largest smartphone provider in the world after Samsung – ahead of Apple. The US authorities have accused the Chinese company of spying for China. So far, no evidence has been made public. The USA is urging other countries to refuse Huawei access to the 5G mobile phone standard. Huawei has always denied the allegations.