U.S. Trade With Huawei Returns
American companies can work with Huawei Again
President Trump is now allowing companies in the US of A to sell goods to the Chinese tech firm following more than a month of uncertainty.
Huawei has undoubtedly been through the wringer since the American government added it and 70 of its affiliates to the “entity list”, forbidding U.S. companies from doing business with it.
Impact to Huawei
The impact on Huawei’s networking and consumer devices business has been pretty substantial. A range of chip companies reportedly forced to sever ties while Google, which provides Android for Huawei devices, also froze its relationship.
Huawei founder and chief executive Ren Zhengfei said recently that the ban would cost the Chinese tech firm — the world’s third-larger seller of smartphones — $30 billion in lost revenue of the next two years.
Now, however, the Trump administration has provided a reprieve, at least based on the President’s comments following a meeting with Chinese premier Xi Jinping at the G20 summit this weekend.
The U.S. President stated:
US companies can sell their equipment to Huawei. We’re talking about equipment where there’s no great national security problem with it,
Despite the good news, it will be some time before any mutual trust between the company and the United States returns to anywhere near where it was before this debacle. We actually doubt that this will ever be a comfortable relationship again.
Self-Sufficient
Huawei has taken steps to hedge its reliance on America, including the development of its own operating system to replace Android, as well as its own chips. Even after this latest news, we are expecting that these projects will continue to develop to ensure that Huawei doesn’t find itself in a similar position again in the future.
Of course, decoupling its supply chain from US partners is no easy task both in terms of software and components. This is especially true when you realise that the sale of 59 million smartphones in the last quarter and total revenue of $107.4 billion in 2018 would have to be achieved without US components or software. However, the recent rocky road will have jolted Huawei to ensure that it must have a solid contingency plan ready in its back pocket.
Beyond aiding Huawei, Trump’s move will boost Google and other Huawei partners who invested significant time and resources into developing a relationship with the Chinese tech company.
Trump admitted that US companies sell “a tremendous amount” of products to Huawei. Some “were not exactly happy that they couldn’t sell” to Huawei and it looks like that may have helped tipped this decision.
Unfortunately, we don’t think this is the last we’ve heard from this saga. However, we are glad that things are almost back to normal for one of the most impressive phone brands out there.
