The reprieve for Huawei Technologies and U.S. companies working with the telecom giant has been extended by the Trump administration for another 90 days. Although another 46 of its affiliates was added to the government’s trade blacklist, the Commerce Department announced Monday.
This decision permits Huawei to continue buying products from American companies to support its existing customers. It was made, in part, to minimize disruption in parts of rural America that rely on relatively inexpensive Huawei equipment to carry wireless service in remote areas, Commerce officials said.
Commerce Secretary Wilbur Ross said on Fox Business Network, “It is another 90 days for the U.S. telecom companies … Some of the rural companies are dependent on Huawei. So we’re giving them a little more time to wean themselves off.”
Nonetheless, the Trump administration is still applying pressure to Huawei as 46 Huawei subsidiaries are being added to what is known as the Commerce Department’s “Entity List.” A kind of blacklist that bans U.S. companies from doing business because of national security concerns, Commerce officials said Monday.
“The Department concluded that the company is engaged in activities that are contrary to U.S. national security or foreign policy interests.” In a statement, the Commerce officials said this citing alleged federal violations including providing financial services to Iran and obstructing justice in connection with a probe into violations of U.S. sanctions.
“We now have more than 100 subsidiaries on the Entity List,” Ross said.
The new 46 Huawei affiliates now on the U.S. blacklist are located in countries including Denmark, France, India, Mexico, the United Kingdom, and many others. Meaning the US government has now expanded the ban to include Huawei and 118 of its affiliated businesses.
The company said in a statement, “It’s clear that this decision, made at this particular time, is politically motivated and has nothing to do with national security”
“These actions violate the basic principles of free-market competition. They are in no one’s interests, including US companies. Attempts to suppress Huawei’s business won’t help the United States achieve technological leadership.”
Huawei termed this as “unjust treatment,” asking the U.S. to remove it from the list.
In a document sent to CNN Business, the Commerce Department clarified what kinds of products the temporary general license permits US companies to continue selling to Huawei. These include components for consumer tech devices like the chips sold by Intel (INTC), Micron (MICR) and others for Huawei smartphones, tablets or wifi routers. It also allows for the sale of software for bug fixes or security vulnerabilities for smartphone operating systems.
Ahead of the weekend, various outlets had reported that the extension would be put in place early this week, with the initial 90-day license due to expire on Aug 19. But then the president sent a warning shot to Shenzhen on Sunday, telling the media that he does not want to do business at all with Huawei because it is a national security threat.
But the decision has now been made, which is a huge sigh of relief for Huawei and the array of U.S. businesses selling billions of dollars of hardware and software to the world’s largest telecoms network and second-largest smartphone manufacturer.
On the same Sunday, Trump tweeted that the United States is “doing very well with China, and talking!” after economic adviser, Larry Kudlow appeared to indicate progress toward a deal. In the meantime, on Fox Business on Monday, Commerce Secretary Wilbur Ross claimed that Chinese vendors have borne “all or part of the hit” from Trump’s tariffs on Chinese-made goods.
The announced extension of Huawei’s “temporary general license” maintains the exemption that was put in place after the executive order blacklisting the company was signed in May.
Although after Trump met China’s President Xi at the G20 Summit in Osaka in June, it had seemed as though Huawei had secured a more lasting solution. But seems like the detente was dented by a stall in the ongoing trade talks and Huawei was very much put on the back foot
President Trump’s government has long debated that Huawei poses a national security threat, and has insisted Beijing can use the company’s products to spy on other nations. These claims by the US government have driven them to urge its allies to restrict or ban the use of Huawei equipment in their 5G networks. Making these efforts which would in future hurt Huawei’s attempts to become the global leader of the next generation of wireless technology.
However, Huawei has continually denied that any of its products pose a national security risk.
The Tech-giant’s tensions with the Trump administration became inflamed after Chief Financial Officer Meng Wanzhou was detained last year in Canada at the request of U.S. authorities, who are seeking her extradition.
Meng, who is the daughter of the Chinese tech giant’s founder and CEO, is suspected of committing bank fraud while trying to skirt U.S. sanctions on Iran.
Then later on the battle with Huawei escalated back in May when Washington placed the company on the trade blacklist, thus barring American companies from selling the company software and components without a license. Uncertainties for the company’s relationships with its partners were created by those restrictions, including Google and mobile operators that sell Huawei smartphones.
Huawei smartphones run on Google’s Android operating system coming with popular apps like Google Maps and Gmail. Without access to Google services, Huawei’s devices become a lot less attractive to users outside of China.
“Today’s decision won’t have a substantial impact on Huawei’s business either way,” the company said. “We will continue to focus on developing the best possible products and providing the best possible services to our customers around the world.”
According to researchers at IDC global sales last quarter accounted for about one-third of Huawei’s smartphone shipments. And before the ban in 2018, Huawei sold nearly half of its smartphones outside of China. At the moment the company faces fierce competition from Samsung and rival Chinese companies.
In the case that Huawei can’t work with Google in the future, the embattled Chinese company is really trying to protect its smartphone business having announced its own operating system, called HarmonyOS earlier this month. In theory, it can be used to replace Google’s Android in Huawei smartphones and other devices.
Despite this, the company’s challenge with its new operating system will be getting developers to build apps for HarmonyOS.
Not forgetting, the launch of HarmonyOS news was followed by a report that Huawei plans to launch Google Maps Rival, termed Huawei Map Kit, as soon as October. The state-controlled China Daily claimed Huawei was hastening plans “to cope with the U.S. government’s ban on using Google Maps in its overseas smartphones.”
But last week, Huawei CEO Ren Zhengfei warned the U.S. that if his company is denied access to the full Android OS for its future smartphones, the company will set out to break the dominance enjoyed by Google over the world’s smartphone ecosystem.
“If the U.S. government does not allow Google to provide the Android operating system … then the world may have a third operating system; and that is not in the best benefit or interests of the United States,” Ren told Sky News.
The next 90 days, which by the way is to Sunday, November 17, not November 19 as reported elsewhere, will see the release of the company’s next big flagship phone, the Huawei Mate 30 Pro. This is because it will launch in the extension period and it’ll be able to use Google Android as its operating system.
Earlier this month, Richard Yu, CEO of Huawei’s Business Group which manages its smartphones division, said that the company is prepared to launch the phone with its own operating system, HarmonyOS if needed, but that is very much Plan B.
The additional 90-day reprieve also means that already existing Huawei phones like the P30 Series will get the security and software updates that other Android phones will, making them much more appealing purchases.
Another thing is that the company has a much longer time to finesse its own HarmonyOS in case it’s needed for the next flagship release of 2020. That’s probably the next P series phone that will most likely launch in March or April next year as expected.
In simplicity, if the 90-day reprieve hadn’t been granted, Huawei would have had about four or five weeks to ready its alternative OS. Fortunately now with the extension, putting the Mate 30 Pro in the Android camp, Huawei has about eight months before HarmonyOS could possibly be needed. This is good news, don’t you think!
However, as we all know, all the company wants is to be off the Entity List, and it will keep fighting for that.