Huawei could quickly lose its grip on its No. 2 ranking in worldwide cellphone sales after Google announced it would comply with U.S. government restrictions meant to punish the Chinese tech powerhouse.
Anoshua Chaudhuri an economics professor at San Francisco State University said, “If they put a company on the entity list that means no U.S. company or manufacturer can work with that company. They’re banned from working with that company. So Huawei being on that list now makes it impossible for U.S.-based companies and U.S. companies that have subsidiaries around the world to work with Huawei anymoreTrump trade war Hu”
The Trump administration’s move, which effectively bars U.S. firms from selling components and software to Huawei, ups the ante in a trade war between Washington and Beijing that partly reflects a struggle for global economic and technological dominance.
“Pushing Huawei out from using U.S. products and U.S. manufacturers is going to force them to develop something of their own. They’re already in the cheap phone market so this is going to probably actually make it better for them to have something in house that could work. They could actually make phones cheaper and sell them in other markets. They’ve said they have enough parts and components for about three months. They’re going to try to figure out their supply chain in those three months,” said Anoshua Chaudhuri an economics professor at San Francisco State University.
And Huawei’s executive vice president in the U.K. Jeremy Thompson said that dispute is about trade, not security, “We’re in the middle of a trade war between two big countries so the timing of this is to inflict hurt on our organization. We’re a football in between this trade war.”
For the next 90 days the U.S. Department of Commerce will allow Huawei to purchase American-made goods in order to maintain existing networks and provide software updates to exiting Huawei handsets.
Google said it would continue to support existing Huawei smartphones, but future devices will not have its flagship apps and services, including maps, Gmail, and search. Only basic services would be available for future versions of the Android operating system on Huawei’s smartphones.
“There are ancillary products that were being sold to Huawei. These small component manufacturers might actually lose their biggest customer and therefor may not even be able to exist,” said Chadhuri.
Though the U.S. Commerce Department grants exceptions, the ban announced last week on all purchases of U.S. technology is thus apt to hurt Huawei, analysts said.
San Francisco State University economics professor Anoshua Chaudhuri said Huawei could be forced to develop its own components to replace U.S. technology. That, she said, could help Huawei in the long run.