US restrictions may soon lessen the burden for American companies who count Huawei as a customer by getting a more permanent reprieve on selling to the Chinese tech giant.
Huawei is the world’s largest telecommunications company, second-largest smartphone maker and a key customer for many US companies. The company says it purchased $11 billion in American products last year.
Unfortunately, the company has become a tool in the larger US-China trade war, whereby Huawei has been accused of being a danger to US national security, earning it a place in a blacklist that restricts US companies from selling any product to the company. All this also makes it a bargaining chip in an ugly and still ongoing trade spat between the US and China.
For economic considerations, US President Donald Trump gave remarks that the government is willing to give a few exceptions to companies who will file for a license to do trade with Huawei. As we speak no such license has ever been granted yet.
However, Commerce Secretary Wilbur Ross told Bloomberg on Sunday that licenses allowing US companies to sell to Huawei “will be forthcoming very shortly.” He said his office has received 260 requests for licenses.
These 260 requests have been filed, asking for a license to do trade with the Chinese manufacturer, one of which is believed to be Google. If granted, this could mean that Huawei phones will be able to ship Google Play apps and services again, at least for a short period of time.
Ross also said that the United States is engaged in a “long overdue” overhaul of its trade relationship with China. Speaking at an economic summit in Bangkok, Thailand, he said that the two sides “are very far along with phase one,” referring to a preliminary trade agreement.
Ross didn’t give any ideas as to which firms had applied for the special licenses. But we all know that the trade ban has conspicuously affected Google more than some of these other companies. Huawei can’t offer new phones with a version of Android using Google apps so long as the blacklisting remains in effect. On top of that, its ability to update existing phones will go away when the temporary licenses expire. A more permanent license might let Google and Huawei resume their earlier business.
Although, Telecoms might not be so lucky. The Huawei ban was largely incited by concerns that China might push Huawei to spy on Americans through cellular equipment, and the FCC has even proposed banning telecoms from using Huawei hardware if they receive Universal Service Fund money. Those companies that do receive exceptions are most likely to have little to do with telecom infrastructure.
All this unfolded when the US Commerce Department in May added Huawei to its Entity List, quoting national security concerns. Immediately, the action barred American companies from selling to Huawei without a license, though some found limited ways around the restriction. In August, the Commerce Department extended the “temporary general license” that has allowed American companies to continue with some sales to Huawei, but it is set to expire in mid-November.
The Entity List action has hurt sales at a number of Huawei’s US suppliers, including chip manufacturers such as Micron and Intel, and software makers like Google. Many of those American sellers to Huawei have spoken out against the policy, saying it could lead to the development of similar products from Chinese companies and threaten American technological dominance.
Microsoft President Brad Smith told CNN’s Poppy Harlow last month that while he understands the desire to keep Huawei equipment out of the US wireless networks, he opposes the decision to restrict sales of US products to the Chinese company.
“If somebody from the government believes that Windows on a laptop sold by Huawei would create a national security risk to the United States, then, of course, that’s something that we want to talk about and think hard about. But we don’t think that is the case,” Smith said, adding that Microsoft had applied for a license.
“Right now, there is not a Chinese competitor in the PC operating system space. Is it really in the United States’ economic interest to create not only an incentive but the necessity to go create a Chinese operating system? Because once it’s created, it will compete with us around the world,” Smith said.
Huawei has long been accused by US officials of working to undermine US national security and foreign policy interests. Ross has previously said that licenses will only be granted for sales of products that do not pose a national security risk.
The tech-giant vehemently denies that it poses any threat to the United States or that it has any connection to the Chinese government. Also holding that it does not want to be part of a larger US-China trade deal, Huawei says it would prefer to work out a resolution with US officials directly.