The president of the U.S., Donald Trump, and his Chinese counterpart, Xi Jinping, have called for a truce for the trade war between the US and China at the G20 summit in Japan. And as we always suspect, Huawei has been used as a bargaining chip. Reports that the US has obtained favorable conditions for an agreement that will make China buy “huge” quantities of US agricultural products according to Trump. And in return, Trump said: “US companies can sell their equipment to Huawei, we’re talking about equipment where there is no national security problem.”
If this declaration and the truce are respected, it will depend on companies like Google, ARM Holdings, Qualcomm and some other Huawei suppliers in the US or that use American technology to decide whether to resume business with the Chinese manufacturer. It appears that the ban has been in place for months, but in fact, it has been around 6 weeks since the US Department of Commerce put Huawei on the entity list. This has prevented the company from accessing its US-based supply chain. Companies like Google announced that they were cutting ties with Huawei due to the ban. Considering that Huawei has spent $11 billion on supplies from the US. Last year, we could imagine that these companies are anxious to restart shipping to Huawei.
Huawei had planned to use its HongmengOS (also known as Ark OS) to replace the Android version of Google Play services. And was going to use his App Gallery as a substitute for the Google Play Store. The company said it had a chip year that it had kept in the inventory anticipating a future ban. Although Huawei designs its own Kirin and Balong chips, it uses software and technology of US origin authorized by ARM Holdings. Surprisingly, this may have been Huawei’s most vulnerable area, and it’s something they will undoubtedly study to see how they can be better prepared to face such a ban in the future.
Huawei’s Use As a Bargaining Chip Was The Plan From The Beginning
Last year, Huawei sent 206 million phones and continued the momentum delivering another 59 million during the first quarter of 2019. This placed it second in the world only to Samsung. The company was on track to become the largest smartphone maker in the world by next year until the ban is announced. For the first half of the year, Huawei claims to have sent more than 100 million phones but is expected to send a total of 140-160 million units this year due to the ban. It is not clear how long it will take Huawei to return to production before the ban. While Huawei recently pointed out that last year’s current P30 and Mate 20 Pro line would be upgraded to Android Q, the real concern was the launch of the Mate 30 line by the end of the year. These phones should be Huawei’s most advanced phones by 2019.
Days after Huawei was first entered on the Entity List, Trump said “Huawei is something that’s very dangerous…from a military standpoint, it’s very dangerous…so it’s possible that Huawei even would be included in some kind of a trade deal. If we made a deal, I could imagine Huawei being possibly included in some form, some part of a trade deal.”
The US still considers Huawei a big threat to national security because of a law in China that would allow the communist government to demand Huawei to collect intelligence on its behalf. And for that reason, there is a concern that Huawei’s devices and network equipment contain a backdoor that would send information to US companies in Beijing. The company denied it and last month President Liang Hua offered to sign a no-spy agreement with any country.
In addition to being one of the world’s leading smartphone manufacturers, Huawei is the world’s leading provider of network equipment. Due to security concerns, the US pleaded with the allies not to allow the use of Huawei equipment in their telecommunications networks. So far, New Zealand, Japan, and Australia have been paying attention to the warnings, while the UK is debating whether to allow the use of equipment.
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