Most are still waiting for the US Department of Commerce (DoC) to make sense of his remarks at the G20 summit in Osaka that “US companies can sell their equipment to Huawei”. Trump added that would be the case so long as deals would not present “a great, national emergency problem”.
Effectively, he has temporarily removed Huawei from the entity list, the DoC’s list of banned companies. No US citizens or companies, or even people in the US who are not citizens, may trade with anyone on the entity list.
But it is up to the DoC to turn Trump’s words into a legal ruling. Until then Huawei and its trading partners are not celebrating. Some fear the damage to US interests has already been done.
Huawei has already announced that it is developing its own mobile operating system as an alternative to Android, which has well over 80% of the world market, with Apple’s iOS having most of the rest. Developing a rival OS is risky, as Microsoft showed with Windows Mobile, but most Android phones are made in China and a shift to Huawei’s OS could damage Android app developers.
Google, offers Android as open-source but runs the Playstore apps service as a commercial venture, and has therefore been affected by the Huawei embargo. Google “will probably get a temporary licence” to sell to Huawei, suggested a Huawei source.
Meanwhile others in the equipment supply chain – including chip makers and software suppliers – have been analysing the impact of the Huawei ban and looking for alternatives – especially in China, Japan, South Korea and Taiwan. The disruption caused by Trump’s embargo may force them to switch suppliers.
Ren Zhengfei (pictured), the founder of Huawei, said last month the embargo will cost the company $30 billion in revenue, but it still expects sales to be $100 billion this year. Industry sources expect the first-half revenues – to be announced in around two weeks – will still show 20-30% growth on 2018, though the effects of the embargo will be higher in the second half.
However Huawei is being positive about its 5G sales. It claims to have sold 150,000 outside China already and is aiming for 500,000 by the end of 2019, according to sources.
But Huawei is still affected in the US by two other Trump items. An executive order bans any element of the US government from buying anything from Huawei or its Chinese rival, ZTE; and an act of Congress bans anyone with a government contract – even for supplying an elevator or a phone wire to a federal building or even a post office – from using Huawei or ZTE. In particular this has affected rural phone companies, which have not been otherwise banned from using Huawei or ZTE.
Huawei is challenging those rules in the courts, and sources say it will not step back from that. “Management will dig their heels in and demand a fair hearing,” Capacity was told on Monday.
Huawei is “not going to be satisfied” by whatever temporary licence is issued by the DoC after Trump’s Osaka statement on Saturday.
But the mood at Huawei is “a degree of confusion”, Capacity was told. “We don’t know any more about any temporary licence than the industry knows.” Trump alluded to a bigger discussion about Huawei at the end of the US-China trade talks. “We don’t know what that means. I don’t think he knows himself what he means. Nobody is clear about what it means.”
