Huawei’s battle against the United States related to the trade ban isn’t coming to an end. However, the company seems to have got a temporary reprieve as a proposal of the U.S. to further restrict sales to Huawei Technologies has encountered objections within the Trump administration and is being held.

U.S. Commerce Secretary Wilbur Ross said on Thursday that new rules were in development that would further limit U.S. companies from supplying Huawei. However, the rules are being opposed by the U.S. Defense Department.

The blocking of the restrictions on Huawei comes at the U.S. Defense Department shares the same concerns that Qualcomm and other U.S. suppliers have been telling the White House that blocking trade with Huawei will cut off revenue that could be used for further product research.

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The new rules will make it harder for American companies to sell to Huawei from their overseas facilities. Some US-based firms have been selling to Huawei even after the ban, taking advantage of the exemptions if most work to create the products happens outside the United States. The current threshold permitting sales kicks in when 75 percent of the work occurs overseas but the administration is now debating raising this to 90 percent.

Huawei, which the world’s largest telecoms equipment supplier, is one of the biggest purchasers of chips. Semiconductor makers in the U.S. have argued that a complete clampdown is counterproductive since the parts that Huawei needs can be bought from non-US providers.

Amid all this, the Chinese giant is continuing its efforts to reduce its dependency on US-based technology. The company has already unveiled its completely new operating system named HarmonyOS and is working on HMS as a replacement for Google services.

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Huawei has sued the U.S. government over the recent FCC restrictions that further curbs what little business the company has left in the U.S. The lawsuit challenges a decision taken by the FCC that prohibits rural carriers in the country from using federal subsidies to purchase Huawei equipment.

This is the second such lawsuit from Huawei in the U.S. after it first challenged the ban on the sale of its products to federal agencies back in March. The latest lawsuit was filed in New Orleans against the FCC after it branded the company as a ‘national security threat’ and restricted the sale of Huawei equipment to rural U.S. carriers by blocking access to the Universal Service Fund (USF) for purchases from both Huawei and ZTE.

Huawei’s business with rural U.S. carriers is minimal in comparison to its massive 105 billion revenue posted in 2018. However, it says that such decisions create a stigma around the company which will affect its ability to grow its business globally. Branding a multinational company like Huawei as a national security threat would indeed affect its reputation around the world.

For example, prime minister Boris Johnson recently said that the UK could block Huawei from investing in its 5G networks. Even Japanese carriers have excluded Huawei from 5G deployment. But the company has already signed 50 5G contracts with carriers around the world. So, it’s very important that Huawei protects its reputation on a global scale.

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Huawei argues that the U.S. ban doesn’t provide any proof to support its claims of “backdoor access” or “national security threat”. Also, given how competitors like Nokia and Ericsson make a lot of their telecommunications equipment in China, the claim of China-made gear threatening U.S. security also applies to Huawei’s competitors.

“Both FCC chairman Ajit Pai and other FCC commissioners failed to present any evidence to prove their claim that Huawei constitutes a security threat, and ignored the facts and objections raised by Huawei and rural carriers after the FCC first made the proposal in March 2018,” said Huawei’s Chief Legal Officer Song Liuping at a press conference in Shenzhen that was live-streamed.

This lawsuit comes at a time when some companies like Microsoft were granted a special license to trade with Huawei. It remains to be seen whether this move from Huawei will have any effect on future license approvals from the U.S. commerce department.

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Huawei announced the new MateBook D series of notebooks alongside the new MatePad Pro and Sound X speakers earlier today in China. The MateBook D came with Windows 10 pre-installed, which might have surprised a lot of readers. So it turns out that the U.S. commerce department has recently approved some licenses to trade with Huawei, including the one requested by Microsoft.

The Redmond giant revealed in a statement to Bloomberg a couple of days back that it has been granted a license to “export mass-market software” to Huawei. While the company didn’t elaborate on the term ‘mass-market’, we now know that it includes Microsoft’s Windows 10 platform.

Prior to this, Huawei pre-installed Deepin Linux on its MateBook models as a replacement to Windows 10. The telecommunications giant wasn’t allowed to use Windows 10 on its MateBook models ever since it was added to the U.S. government’s Entity List. So it was selling cheaper versions of its MateBook laptops running Deepin Linux onboard. Despite the advantages of having a Linux setup, Windows as a platform doesn’t have viable replacements. So getting the supply for Windows 10 back on its notebook models should come as a huge reprieve for the company.

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The U.S. commerce department reportedly got around 290 requests for a license to trade with Huawei last week. Unfortunately, only a handful of these requests are expected to be approved. We have no word on which other companies have been granted licenses apart from Microsoft.

To recall, Microsoft’s President Brad Smith, was vocal about how the U.S. ban on Huawei was both unfair and un-American. Microsoft had reportedly approached the Trump administration to talk about the ban but would often get vague replies like, “Well, if you knew what we knew, you would agree with us”.

Microsoft’s license to trade with Huawei is a step forward. However, the company’s struggle is far from over. There are still companies like Google who are barred from selling its software to the Chinese giant. And Google is very important for Huawei, who is currently the world’s second-largest smartphone manufacturer. In fact, it could have even surpassed Samsung by this year-end to become world number one. But without Google services onboard, Huawei smartphones are essentially Dead on Arrival (DOA) in the international markets.

So it’s extremely important for Huawei to get access to Google services as soon as possible. Unfortunately, given the current situation, we don’t know if that’ll happen anytime in the near future.

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While the U.S has been accusing Huawei of installing backdoors on its networking equipment that can be used to steal sensitive user data, this time Huawei is reportedly moving its senior executives and scientists linked to the U.S. to its subsidiaries over concerns that they could be secretly contacted by American agents who might force them to reveal sensitive company information.

In simpler words, Huawei is said to believe that the American administration could infiltrate the former’s task force hailing from the US posing a great threat to the company’s classified data that includes its future roadmaps. Until now, several Huawei executives with senior research and development positions, including Asian-Americans, have left the company or been moved claimed Nikkei’s sources.

A couple of such Huawei officials include Sunhom Steve Paak and Wang Hsin-shih. The former has reportedly been moved to HiSilicon Technologies to serve as the chief technology officer. On the other hand, the latter has made an abrupt exit from the company. While the sources questioned the two employees and Huawei, they either did not reply or decided not to make any comments on this report.

As of now, the Chinese corporation has laid off 70% of its employees at one of its U.S. subsidiary, Futurewei due to the fact that it can no longer maintain trade relations with any other American companies.

We can find mathematicians in Russia, scientists from Europe … if we can’t from the U.S.

Moreover, senior Huawei executives had previously declared that they want to recruit “young geniuses” from around the world. They have also boasted the new hires at Huawei with doctorates are offered an annual salary of up to 2 million yuan ($281,000) which is higher than Google or Apple.

While the U.S ban has drastically affected the sales of Huawei’s offerings which includes smartphones and telecommunication equipment, the company posted surprising results earlier today which exhibit 24 percent growth in the first three quarters of 2019 to 611 billion yuan (US$86 billion).

To wrap things up, this is a tricky situation for Huawei but it seems to be handling it well with strong support from the Chinese government. For now, we can only wait and watch what the future holds for the company.

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As the US-China trade talks resume, Huawei reportedly has a ray of hope. According to the latest report, the Trump administration is ready to approve some licenses that allow U.S. companies to sell goods and services to Huawei. This should come as a respite to the Chinese telecommunications giant whose products like the Huawei Mate 30 Pro haven’t had a proper international release.

NYTimes reports that these approved licenses will allow a ‘select few American companies’ to resume selling their products to Huawei. It is worth adding that back in August, the U.S. government had received over 130 license requests for the same. But it’s possible only a select few of these requests will be approved.

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Without Google apps, the Huawei Mate 30 series is practically DOA in the international market. So the company needs to get Google back on board. Also, its position in the global smartphone market is at risk, with Apple predicted to overtake Huawei by the end of this year. Even Samsung’s smartphone department posted better than expected results last quarter, at Huawei’s expense.

However, Huawei’s fate will ride on how the trade negotiations go between these two countries this week. And the atmosphere is quite tensed right now after China slammed U.S. companies for supporting Hong Kong. In fact, recently, Chinese companies like Vivo, Tencent, and CCTV suspended ties with the American NBA association after a  Houston Rockets executive tweeted supporting Hong Kong’s pro-democracy protesters.

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Ever since the US trade ban, Huawei’s global sales have taken a hit. The company’s market share and shipments in Europe have declined and it looks like its global prospects are still uncertain. The temporary license that was granted to the company back in May has been extended. But considering how it applies to only existing products, the brand’s new models like Huawei Mate 30 series are going to be affected by this trade ban.

The Mate 30 series is the first major flagship lineup from Huawei after the trade ban came into effect in May. The phone is set to take on the likes of the Samsung Galaxy Note 10+ and the upcoming iPhones with a powerful camera setup and a waterfall display. However, the phone’s global prospects look dim as South China Morning Post reports that Huawei could delay the global release of the handset due to the trade ban.

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While Huawei has been scrambling to stabilize its supply chain with non-US based replacements, the software is one area where there aren’t any viable replacements. Essentially, Android is an open-source platform, so the Mate 30 series could use an unlicensed version of the OS. However, without Google Services onboard, which has become a very important aspect of Android for international users, global sales are definitely going to take a hit.

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Even if Huawei decides to use its self-developed HarmonyOS, that still doesn’t solve the issue of the lack of Google Apps. So for now, HarmonyOS doesn’t look like a viable solution to the problem. If we don’t see a change in the current situation between the US and China, Huawei will have to be prepared to take a significant hit in its overseas sales.

It could offset some loss with a more aggressive China strategy. In fact, a recent Canalys report indicates that nearly 64 percent of Huawei’s global sales were from China in Q2 2019! We could see this figure further go up very soon as Huawei aims to grab nearly 50 percent of the market share in China by the end of this year, up from 38% right now.

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Patents are one of the biggest assets for any technology company and last month, Huawei decided to retaliate to the US trade ban by demanding Verizon to pay over $1 billion in total as fees for over 230 patents. Now, two US senators want to block Huawei from buying or selling US patents by introducing a new bill in the country.

The WSJ reports that the bill essentially seeks to give power to the US federal government to stop companies listed on its trade blacklist from buying, selling, or exclusively licensing US patents. It would give the government the authority to step in any domestic case relating to patent infringement. Further, the bill will force the blacklisted company to notify the Justice Department as well as the Patent and Trademark office of such a case and provide details on the infringement, financial implications, and damages demanded.

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The bill is clearly aimed at Huawei who is currently in the government’s crosshairs. Naturally, the Chinese telecommunications giant is not happy with this bill. The WSJ report adds a statement from Andy Purdy, chief security officer for Huawei Technologies USA – “If (this bill is) adopted, it could have severe negative ramifications by creating global mistrust of the U.S. and its ability in upholding, as well as safeguarding intellectual property rights.”

While Trump’s comments from the G20 summit had eased some of the tensions between the US and China, there are still a lot of new developments worsening the situation. For example, US-based Cape, a cloud platform vendor for drone telepresence and data management, abruptly stopped support for the popular drone maker, DJI as well as other Chinese drone makers. On the other hand, a recent editorial for the state-run Globaltimes argues that China could anytime leverage its position in rare earth minerals to pressurize the US.

Overall, it looks like this trade war is far from over and we’ll see a lot more developments in the coming months.

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Earlier this year, the US government put Huawei in a tough spot after adding it to the Entity List. Given that Huawei sources a lot of components for its smartphones as well as networking infrastructure from the US, this was a big blow to the Chinese telecommunications giant. However, according to the comments from Huawei’s President of Global Affairs, Victor Zhang, things were probably not as bad as we thought because of the company’s ‘Business Sustainable Management’ strategy.

In an interview with Xinhuanet in London, Victor revealed that Huawei established a strategy nearly 10 years ago wherein the company has two sources of supply for each component. This along with stockpiling essential components likely should have helped the company sustain the US ban for the past few months. But it’s worth adding that there are some essential components which don’t have an alternative, at least not right now, like Google’s Mobile Services for Android.

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He further revealed that in the context of globalization, components aren’t 100% self-produced. So, it becomes necessary to cooperate with upstream and downstream industry chain to ensure the stability of product supply. He added that Huawei invests more than 10% of its sales revenue every year. There are more than 80,000 people working in R&D in the company right now, which accounts for 45% of the company’s workforce.

While talking about UK’s scene, Victor said that Huawei has invested more than £100 million ($126 million) in the UK, with over 300 engineers working in fields such as AI and 5G. This number is further expected to increase to 400 in 2019. A new R&D center in Cambridge is also in the works. 

At present, Huawei has more than 2.500 patents in 5G with a total investment of more than $4 billion. 

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Huawei has been under the spotlight for the past couple of months, especially since the US government banned the company from conducting business with its companies. After the recent G20 summit, the ban was eased by the government, but Huawei still wasn’t removed completely from the Entity List. However, despite the ban, Huawei seems to have done pretty well in the first half of the year as the company’s chairman, Liang Hua revealed at a press conference today that Huawei increased its revenue in the first half of the year. He further confirmed the name of its upcoming operating system, Hongmeng OS at the press conference. 

Huawei posting increased revenues in H1 2019 isn’t entirely surprising given that the ban came into effect in May. So Huawei’s performance in the initial four months of the year could have been pretty strong to mitigate its effect. If you remember, Huawei had already managed to ship over 100 million smartphones before the ban came into effect. So, the real damage from the ban will probably be seen in the second half of the year. Note that initial estimates revealed that Huawei’s US trade ban was likely to wipe out $30 billion of the company’s revenue. 

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At present, Washington’s stance is to allow US companies to sell their technology and products to Huawei as long as these products don’t pose a threat to national security. But Huawei’s chairman isn’t happy with the current situation. In the press conference today, Liang said that “adding Huawei to the Entity List was neither justified or fair,” and that Huawei “should be removed from the list entirely”.

He further said that the company’s Hongmeng OS was developed for IoT products and that Google’s Android was the preferred OS for smartphones. “We haven’t decided whether to develop HongMeng into a smartphone OS yet” he added. But this could change if Huawei is barred from using Android on its phones.  

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Huawei has confirmed that it is working on its own Android-based Operating system that will be its fail-safe against a complete ban from Google’s licensed version of Android OS. Over the past couple of weeks, many potential names have popped up like ‘Ark OS’ and ‘HongMeng OS’. However, it looks like the company’s new operating system could be called ‘Oak OS’, as revealed by Globaltimes today.

Huawei’s OS is said to be called as ‘HongMeng’ OS in China and ‘Oak OS’ internationally. The rumors about the name Ark OS emerged from a few European trademarks from the company. Plus, Huawei’s compiler is called as the Ark compiler which further led people to speculate that the new OS will end up being called as the Ark OS.

If Globaltimes’ source is accurate, then the so-called ‘Oak OS’ from Huawei is currently being tested intensively. The launch is expected sometime around August or September, which is about the same time when Huawei’s 90-day temporary respite from the US trade ban ends.

The US is increasingly blacklisting Chinese companies over the past few months. While it will adversely affect these companies in the short run, many believe that this trade ban could be worse for everyone in the long run. In fact, according to a report from the Financial Times, Google has warned the U.S. government of the potential security challenges arising from this ban on Huawei.

Google reportedly said that if Huawei was to roll out its own Android system based on AOSP, it would be less secure than Google’s version. There could be bugs and issues which could put Huawei phones at risk of being hacked. In fact, FT quotes Google saying, “Our focus is protecting the security of Google users on the millions of existing Huawei handsets in the US and around the world.”

While Google’s points are valid, Huawei Oak OS has the potential to replace Google’s licensed Android on non-Huawei phones as well. With the increasing threat to non-US companies from the Trump government, many are looking for alternatives to US technology. In fact, it wouldn’t be surprising if other Chinese companies joined Huawei to work on Oak OS to ensure they aren’t overly dependent on US companies.

However, before we speculate too much, it’s worth noting that it remains to be seen if the Huawei ban will stand after the 90-day respite. But from how things are developing, it looks like Huawei’s Oak OS would be rolled out, even if the trade ban was lifted.

Clearly, the next few months will be an interesting period for all of the smartphone industry.

What are your thoughts?

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Huawei’s US ban will be ‘incredibly damaging’ for ARM says the company co-founder Hermann Hauser. This comment comes at a time when the British ARM is banned from supplying chip designs to the Chinese telecommunications giant.

Back in May, Huawei was added to US’s entity list which meant it was practically banned from trading with US companies. This also meant that the Chinese giant couldn’t use any technology with components sourced from the US. Since ARM’s chip designs contain origin US technology, it could no longer keep supplying its chip designs which are essential for Huawei’s smartphone and server businesses.

Since US technology is a part of a majority of international companies as well, Huawei’s relationship with even non-US companies is also at risk. However, it’s not just the Chinese companies who are threatened by this trade ban. A number of non-US companies are also increasingly worried about this trade ban.

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The US has not been able to give out credible evidence against Huawei, apart from allegations that it is being used by the Chinese government for spying. Since this trade ban came into effect without any strong evidence, international companies are worried about the same happening to them. This is why Hermann says that customers would want to limit technology originated from the US in order to avoid a situation similar to Huawei. This includes products from ARM.

‘It really is quite damaging for Huawei in the short term, and longterm it’s going to be incredibly damaging for Arm and Google and the American industry,’ said Hermann while talking to the Mail.

‘Every single supplier in the world will start thinking of how to reduce the threat of their production being terminated by an American president. All the discussions I have with companies in Europe at the moment are about them going through their intellectual property portfolio and designing American intellectual property out, which is terribly sad and destructive.’

It’s clear that this ban doesn’t just affect Chinese companies. Its long term effects will be felt by companies across the globe.

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Huawei has been under the US government’s radar for quite some time now. It all started off with the US government foiling the company’s plans to enter the US with AT&T’s support early last year. Huawei’s relationship with the US government has since worsened and hit its lowest point last Wednesday after US President Trump signed an executive order adding Huawei to the Entity list, which is basically a list of companies that pose a national security risk. This order bans US companies from buying or selling to Huawei without approval from the government.

What’s Happening Right Now With Huawei?

Following the executive order from Trump, US companies have started to cut off the supply of its hardware and software services to Huawei.

It started off with Google announcing that it will no longer provide hardware and software products to the Chinese tech giant, except those covered by open source licenses.

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

Huawei’s official response to this matter was as follows:

“Huawei 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 and that are still in stock globally.

We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally.

Huawei has made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefitted both users and the industry.”

What Happens To Existing Huawei and Honor Users?

No need to panic yet. Huawei will continue to provide security updates and after sales services to all existing Huawei and Honor smartphones and tablets. This includes the units that are still in stock with retailers.

Google Play Store and Play Protect will continue to be available on existing Huawei devices. However, it remains to be seen whether a future update to Play services will cause Huawei phones to lose Play certification.

Also, the company hasn’t mentioned support for products that are yet to be shipped. This could be an indication that Huawei is yet to finalize how to proceed with this trade ban.

Who Else Is Following The Trade Ban?

Basically, all US companies have to comply with this executive order. In this regard, companies like Qualcomm, Micron, Qorvo, Skyworks, Intel, Xilinx, and even Broadcom have reportedly stopped supplying their products and services to Huawei.

A couple of weeks back, Huawei had officially revealed that it had 30 US companies as its core suppliers. Losing supply from all of them at once is definitely a big blow. It won’t be easy finding replacements for all of them.

What Can Huawei Do Right Now?

Huawei has been preparing for this eventuality for a while now. After seeing ZTE suffer from a trade ban last year, Huawei has been stockpiling components for up to a year’s supply. However, there are some key components that you can’t really stock up in advance.

As for things that it can’t really stock up, like Google’s Play services, the company has been reportedly working on alternate options. Huawei has long been reported to be working on an alternate OS to Android, specifically made for such an eventuality. The details are scarce at the moment, however, the company had mentioned a few months back that it would use it as the very last resort.

This might just be the time for this last resort, but personally, I think, Huawei would want to stick to Android for a foreseeable future.

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Why It Makes Sense For Huawei To Stick With Android?

Android is currently the world’s largest smartphone operating system. The OS has a market share upwards of 70%. No other OS comes close to this figure, not even Apple’s iOS! It’s clear that consumers prefer Android over most other alternatives out there.

Also, history hasn’t been kind to new entrants in this industry. Windows Mobile, Firefox Os, Ubuntu have all tried to capture a share of the smartphone market but failed miserably. So, the question comes to whether Huawei can risk shifting all its phones to a brand new OS?

With hundreds of competent Android smartphone options in the market right now, shifting to a non-Huawei phone won’t be a big deal for a consumer. Most users like familiarity. So, even if Huawei is the second largest smartphone maker in the world, it would be hard for the company to urge customers to stick with them with a brand new operating system.

On the other hand, it can stick to Android AOSP by leveraging its experience in China, where Google services are non-existent. China has a lot of app stores for Android, including Huawei’s own. But most of the apps cater to the Chinese audience and are not known to the western world.

Huawei’s biggest challenge here is how to bring relevant apps to its western users. For this, it will have to tie up with an existing app store with a lot of apps that it can open up for its users. It’s not going to be easy, but Huawei does have experience working with non-Google app stores and could make it work.

What’s The Best Case Scenario For Huawei Now?

Personally, I think the best case scenario for Huawei right now is to get this trade ban reversed. ZTE, a company which was found guilty of violating Iran and North Korea sanctions, managed to survive a similar ordeal last year.

Huawei’s case is even better. The US Government doesn’t really have any credible evidence against the company right now. So, the two economic giants, US and China should be able to come out with a compromise in the near future.

Honestly, I think China has to play the long game right now. Coming to a compromise with the US is probably in its best interest, especially when it’s on the path to becoming a 5G and AI leader. Huawei is already the world’s largest telecommunication equipment provider and leads in 5G technology patents too. It’s all set to dethrone Samsung to become the world’s largest smartphone maker by 2020.

If Huawei and China can work a deal with Trump’s Government, this trade ban would have been all but a minor hurdle in its plans to become the global technology leader. However, if this goes on for a while, Huawei and China have got a lot to lose.

To conclude, all I would say is that trade war is usually a double-edged sword. Both the parties will lose out on something, so it all comes down to which party can afford to lose more. It’s never in the interest of the consumers, so in the long run, we are losing out on healthy partnerships, technology sharing, and innovation, which have been the elements that bolstered the smartphone industry to what it is today!

What’s your take?

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