Last Wednesday (May 15), the US Commerce Department has placed Huawei Technologies and 70 affiliates to its “Entity List”, which bars companies from doing business with US companies.
This list represents a list of companies that the US believes poses a national threat. Huawei in particular, is said to be “engaged in activities that are contrary to US national security or foreign policy interest”.
Being placed on the list means that Huawei — the world’s second-largest smartphone maker — cannot buy parts and components from American companies without US government approval.
This is a huge blow to Huawei, considering that it works with a broad range of US suppliers for its products, including chip makers Intel and Qualcomm, as well as Google for its Android operating system.
According to The Nikkei, Huawei buys about US$67 billion worth of components each year. Out of this figure, US$11 billion is from US suppliers.
Google Cuts Ties With Huawei
Complying to the new federal directive, Google has blocked Huawei’s future access to Android updates.
This means that Huawei will no longer be able to offer access to crucial Google apps, and will be severely limited in how quickly it can give users access to the latest versions of Android, as well as its new features and security updates.
However, the US Commerce Department has issued a temporary license for Huawei to work with businesses in the US, allowing Huawei to resume its partnership with Google.
This will last only until August 19 and it’s unclear how Huawei can gain the full license to work with US brands after this 90-day timeframe.
In response to this saga, Huawei said that it will “continue to provide security updates and after sales services to all existing Huawei and Honor smartphone and tablet products, covering those [that] have been sold or still in stock globally.”
What Does It Mean For Huawei Users?
Following this news, Huawei users in Singapore have rushed to sell their P30 phones on Carousell, worried that it will become obsolete soon.
But don’t panic just yet.
In an official statement, Huawei said: “The products we have sold and currently sell will not be affected. You will be able to continue using these services as you normally would.”
In addition, Android has also tweeted that “Google Play and security from Google Play Protect will keep functioning on existing Huawei device.”
For Huawei users’ questions regarding our steps to comply w/ the recent US government actions: We assure you while we are complying with all US gov’t requirements, services like Google Play & security from Google Play Protect will keep functioning on your existing Huawei device.
— Android (@Android) May 20, 2019
However, the future for Huawei phones remain unclear. It may have to turn to open-source Android, which lacks popular Google apps such as Gmail, Maps and YouTube.
Without access to the Google Play Store, Huawei would be forced to work directly with developers to get them to create versions of their wares for its phones.
How Will The Ban Impact Huawei’s Business?
The impact on the China market is expected to be minimal as most Google mobile apps are already banned in China (they rely on alternatives offered by local firms like Tencent and Baidu instead).
However, this move will greatly damage the brand’s appeal to consumers outside of China.
Last year, almost half of the 208 million phones Huawei shipped is directed to outside mainland China.
Europe in particular, is Huawei’s most important overseas market where its devices currently have 29 per cent market share, according to technology research firm IDC.
In regions like Europe, having those Google apps is critical for smartphone makers to stay competitive.
As a workaround for the Google ban, Huawei would have to ultimately build its own operating system, just like what Apple did for its iPhones.
Alternatively, Huawei could start a new branch of the Android family based on the existing open source version.
Either way, both solutions will definitely take time.
Huawei founder and CEO Ren Zhengfei told Japanese media on Saturday (May 19) that they’ve “already been preparing for this (blocked from using Android)”.
The company has come up with a ‘Plan B’ by developing its own technology for nearly seven years, and some of this technology is already being used in products sold in China.
Mr Ren said that Huawei would continue to develop its own components to reduce its reliance on external suppliers.
He is confident that Huawei will continue to see growth, albeit slight and slow progress.
While the recent ban seems to only affect Huawei right now, it’s going to have a domino effect for the entire industry, and will most likely have implications for the next smartphone you buy.
It could also mean the rise of a new mobile operating system that could potentially be a serious challenger to Android.
Featured Image Credit: CIO Bulletin
