The Chairman of Huawei Technologies has just stated that the company aims on returning to the smartphone ‘throne’ despite its handset operations being crippled by the US sanctions.

For those unaware, the former US President Donald Trump had enforced new sanctions on the Chinese tech giant and had it placed on the export blacklist back in 2019. This banned the company from sourcing key technologies that originate from the US, which affected its ability to design its own chips and acquire components from its supply chain. Company’s Chairman Guo Ping stated in a recent Q&A with staff “Everyone knows that phone chips need advanced technology in a small size with low power consumption. Huawei can design it, but no one can help us make it: we’re stuck.”

Although, Guo believes that this issue is solvable, adding that “Huawei will continue to exist in the field of mobile phones and with continuous advances in chip production, the smartphone throne will eventually return.” Despite being one of the largest smartphone makers in the world just two years ago, the brand has since fallen off the the top 5 vendor lists in recent times. Furthermore, the company even had to sell off its budget smartphone unit, Honor, to keep the brand alive.

As of right now, Huawei’s revenue has declined by 29 percent in the first half of this year, which marks its biggest fall. The fall in revenue was especially notable in its consumer business operations like smartphones that saw a sizeable 47 percent decline in revenue, falling to 135.7 billion Yuan (roughly 21 billion US Dollars).

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Two Republican lawmakers in the US are calling for the expansion of restrictions against export of chip making tools to China. This arrives after the US government recently added seven new Chinese supercomputing based entities in its trade blacklist.

According to a BloombergQuint report, Michael McCaul of Texas, the top Republican on the House Foreign Affairs Committee, and Arkansas Senator Tom Cotton have asked the US Department of Commerce to make it mandatory for American based tech firms that make electronics design automation tools, which are used to help design computer chips, to obtain a license from the government before allowing export of any products to China.

As per McCaul and Cotton wrote in a letter to Commerce Secretary Gina Raimondo, “There is clear evidence that companies linked to the Chinese Communist Party military are using this software technology to develop advanced weaponry.” Previously, the US added seven Chinese supercomputing based firms into its trade blacklist, which prevents them from receiving exports from American companies. The reason for the blacklisting is due to alleged national security risks.

The two lawmakers also asked the State and Commerce departments to find a way to “mitigate the risk of Taiwanese companies providing services and technologies to entities of concern,” further adding that the Taiwan Semiconductor Manufacturing Company (TSMC) shouldn’t be making advanced chips for China’s military. We also reported on TSMC officially suspending new orders from one of the companies blacklisted by the American government.

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Micron Technology has yet to regain a new license to continue selling to memory chips to Huawei Technologies. This may lead to the company’s sales to fall for the next two quarters, as per an executive.

According to a Reuters report, Micron had previously obtained the license to supply the Chinese tech giant with memory chips for its smartphones and servers from its factories outside of the United States. For those unaware, companies are required to gain a special license from the US government, after the smartphone maker was put in the “Entity List” by the US Commerce Department, and faced an export ban.

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Recently, the US has further reinforced the restrictions on the company that bars it from using any US made tools or software, which came into effect as of 14th September 2020. In other words, this has caused a complete halt in shipments from Micron to Huawei. The latter accounted for about 600 million US Dollars out of the former’s 6.06 billion US Dollars in sales for the fiscal fourth quarter that ended on 3rd September 2020, meaning about 10 percent of its total sales.

According to Sumit Sadana, Micron Chief business officer, “The manufacturing equipment in those fabs are obviously from U.S.-based companies,” which is why the shipments have stopped altogether. The senior official also added that “As soon as we get the license, we would work with Huawei to determine how we can resurrect the business.” So, if a license isn’t acquired, Micron stands to lose out on a notable part of its business due to recent sanctions.

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The US has imposed another ban on another Chinese firm. This time the export restrictions have targetted Semiconductor Manufacturing International Corp (SMIC), China’s largest semiconductor foundry based company.

According to a Bloomberg report, the recent ban will deal another blow to China’s technology industry and are indicative of the rising friction over intellectual property and national security claims. Similar to the situation Huawei is in, US based firms will now require a license to export certain products to Chinese chipmaker. Apparently, the reason for the recent sanction is due to an “unacceptable risk,” as these products might be used for military purposes.

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The risk of military use was reported by the Financial Times, which cited a letter from the US Commerce Department that was sent to the company. In an email statement, SMIC said that it had yet to receive any official notice of the sanctions and has no relations with the Chinese armed forces. It further added that it does not manufacture any military grade goods or products.

The new regulations imposed on SMIC marks the rise in trade tensions between the US and China. In recent times, the political frictions between the two superpowers have led to various clashes, with the Coronavirus pandemic only making matters worse. The Trump Administration has already reinforced various restrictions against Huawei, although, SMIC has yet to face a similar degree of treatment. However, that might soon change as the US might be planning on taking further actions and adding the semiconductor giant to the “Entity List” as well.

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Huawei and ZTE are urging the FCC not to label them as a ‘National Security Risk’. The agency had initially voted to designate the two tech giants as security risks for the US back in November 2019. But the final decision rests with the agency’s Public Safety and Homeland Security Bureau. And both companies are hoping that this risk designation won’t be finalized by the Bureau.

In a 200-page filing by Huawei, the telecommunications giant said that FCC’s efforts to designate it as a national security risk was, “designed to implement a campaign by certain government officials, including members of Congress, to single out Huawei for burdensome and stigmatizing restrictions, put it out of business in the United States, and impugn its reputation here and around the world.” In a similar move, ZTE’s filings asked FCC to assess the company’s efforts in “enhancements in the area of U.S. export controls and economic sanction compliance and security controls in ZTE products”.

Rural carriers in the US are currently barred from using federal subsidies to purchase equipment from Huawei.

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Despite its struggle in the US, the company seems to be doing well internationally. Recently, both the UK and the EU decided to allow Huawei in their 5G deployment, albeit on a limited scale. This goes against the US’ request to put a blanket ban on the Chinese company.

Huawei has long argued that the US ban doesn’t provide any proof to support its claims of “backdoor access” or “national security threat”. It also adds that competitors like Nokia and Ericsson make some of their telecommunications equipment in China, exposing them to similar risks. In fact, back in December 2019, Huawei filed a lawsuit against the US government over FCC’s branding of the company as a ‘National Security Risk’.

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(Source)

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As expected, the U.S. government has extended Huawei’s temporary export license for another 90 days. This will be the third 90-day temporary extension granted to the Chinese telecommunications giant, ever since it was placed under the U.S. Entity list which barred U.S. companies from trading with Huawei.

Huawei’s last 90-day extension expired yesterday, so this announcement was timely. According to the Trump administration, the extension is granted to support the existing infrastructure built by Huawei in the U.S. For example, a number of rural carriers in the country are dependent on Huawei and ZTE’s telecommunications equipment. Replacing them immediately isn’t an option given that it could cost them nearly billions to suddenly shift to another equipment maker.

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“The Temporary General License extension will allow carriers to continue to service customers in some of the most remote areas of the United States who would otherwise be left in the dark,” said the U.S. Secretary of Commerce Wilbur Ross. “The Department will continue to rigorously monitor sensitive technology exports to ensure that our innovations are not harnessed by those who would threaten our national security.”

This 90-day reprieve also allows Google to support Huawei’s existing Android-based smartphones. However, this extension does not apply to new models, so smartphones like the Mate 30 Pro won’t still be able to run Google applications.

While Huawei’s international smartphone strategy is currently in a shambles, the company seems to be working hard with its HarmonyOS to find a workaround for Google Apps. Recently, Huawei’s Ling Hua revealed in an interview with CNBC that the company would announce its HarmonyOS strategy on November 20. He didn’t reveal what kind of strategy he was referring to but it could be anything from bringing HarmonyOS to smartphones to doubling down the focus on IoT products. You can read more about what he said about HarmonyOS and its future from this article.

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(Source)

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