As announced last 17th of August the United States further restricted access by Huawei to “items produced domestically and abroad from U.S. technology and software” starting yesterday Monday 14th September. Although Huawei has constantly denied it, Trump’s Administration has asserted for long time that Huawei products (and other Chinese apps like Tik-Tok) are being used to spy on other countries including the U.S.
Some of this restricted items include chips that are used to make Huawei’s smartphones, a very important business for the Chinese giant. Of course several American companies that are currently selling this technology items to Huawei have appealed Washington to extend the deadline.
This is the last signal of the battle between the U.S. and China over which country will dominate the 5G technology of the future.
Huawei is currently the world’s second largest phone maker (behind Samsung). Latest reports show that has a stockpile for smartphones and 5G base stations that could last until early 2021.
Will US firms also suffer?
According to John Neuffer, president and CEO of the US Semiconductor Industry Association: “These broad restrictions on commercial chip sales will bring significant disruption to the US semiconductor industry”. This organization represents 95% of the U.S semiconductor industry. He also added: “We reiterate our view that sales of nonsensitive, commercial products to China drive semiconductor research and innovation here in the US, which is critical to America’s economic strength and national security”.
Boston Consulting Group warned in a report that this new measures could cost U.S. companies almost 37% of their annual sales.
Also, the FCC (Federal Communications Commission) said last 4th Sept it could cost an estimated 1.8 billion USD to replace Huawei and ZTE items from the U.S. telecommunications market.
Huawei 2019 results
The world’s largest telecom equipment maker released it’s 2019 annual report last 31st March showing a solid business performance as the company’s global revenue in 2019 rose up to 858.8 billion yuan (123 billion USD) more than 19% year-on-year with a net profit of 62.7 billion yuan (9 billion USD).