New U.S. restrictions that took effect on Tuesday prohibit non-U.S. Companies from selling supplies using unlicensed U.S. technology to Huawei.
With new Huawei sanctions coming into effect, the number two smartphone seller hit another stumbling block that could hamper its continued success. While previous restrictions focused on US companies, this one targets foreign companies. Under the new controls, a non-US company is prohibited from selling supplies to Huawei, if those supplies include US technology and even then the company will need a license from the US Department of Commerce. Many current Huawei vendors have already decided it’s not worth it.
US President Donald Trump began launching salvos at Huawei in 2019 as the trade war with China escalated. Huawei has faced several allegations from the US government and companies of intellectual property theft, espionage and violation of US sanctions against Iran through an unofficial affiliate. The latest of those charges led to the company’s chief financial officer, Meng Wanzhou, under house arrest in Vancouver as he fought extradition to the United States to face official charges. Trump used the claims to prevent Huawei from building the US 5G network and has banned its access to hardware and software from most US companies, including Google’s official version of Android.
Now that the new ban has taken effect, Huawei may find itself in trouble as several vendors have stopped shipping to the company, which has a direct impact on Kirin processors – the chip included in most Huawei phones. While the Kirin chipset was created by the designers of Huawei through its affiliate company HiSilicon, American technology was used in the manufacture of the chips. Taiwan Semiconductor Manufacturing Company, Ltd., previously said it would stop supplying the silicon wafers used in their Kirin chips from September 14. Micron Technology, which makes DRAM chips, has also ceased to be a supplier. According to Reuters, another Semiconductor Manufacturing International Corp. (SMIC) has asked Washington to renew its license to sell products to Huawei. MediaTek, a chip designer from Taiwan, also applied for a license last month. However, the Trump administration has openly considered imposing restrictions on the minimum wage, similar to those of Huawei. If this happens, it could be a problem.
Can Huawei survive the ban?
Huawei has done a better job of dealing with the US restrictions so far than one might have thought. The company has never had such a presence in the United States, but has started to expand rapidly in various other countries in recent years, including Canada. After the first restrictions on Huawei and 70 of its foreign affiliates were announced in May 2019, the company said it had been stocking parts since 2018 and had long planned to manufacture its own equipment. When new restrictions blocked the company’s access to Google’s official version of Android, it announced that it was working on its own operating system. This software, HarmonyOS, has yet to make its way to a phone, but it was updated at Huawei’s developer conference last week, and it is rumored that it could make its way into its phones. 2021.
That’s not to say that Google’s ban hasn’t hurt Huawei. Every app for last year’s Mate 30 was to be built on the open-source version of Android, and not having access to Google and its Play Store will be a major shutdown for many North American and European consumers. . The latest update to its EMUI 11 UI is actually still based on Android 10, as Huawei only got access to the source code after its official announcement.
Despite the pressures, the company is always launching new devices. Its P40 lineup is quite popular, and although this is partly linked to Samsung’s losses, Huawei managed to forge a virtual link with the South Korean tech giant for second-quarter smartphone sales. In terms of survival, the question is how long Huawei may have to shut down production until it can find suppliers with the necessary approvals to do business. Huawei can likely weather the storm until then, especially if Trump loses re-election, although it remains unclear whether a different administration will lead to a different outcome.
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