Who can have missed the tech news of the month, even pushing Brexit off the front page! Chinese tech Goliath, Huawei, banned from making business with any US companies by new government requirements. The ban purportedly comes from fears of the tech company allowing their products to be used for spy purposes by the Chinese government, a risk the Trump administration was not willing to take for American citizens and organisations. Huawei of course strenuously denies this as it is an independent company.
Whatever the truth Huawei has enjoyed a meteoric rise to success, growing from relative obscurity to become the second largest manufacturer of smartphones in the world – second only to Samsung – and was projected to overtake it. The company offers high-end tech products at a low to mid-end price, and idea that is obviously popular with consumers, given the massive success of the company.
Put simply Huawei is doublessly eating growing chunks of the American tech pie, so has become the latest battle in the growing US / China trade war.
So what does this trade ban mean for Huawei? In short, it means the company can’t do any business with any US companies. This is where things start to look bleak. Companies included here are:
Perhaps the most concerning of all of these is Google. Huawei’s success and main source of revenue comes from their line of smartphones. All of these phones run on Android, Google’s open source operating system for phones. After a 90 day grace period, it will become illegal for Google to provide any Huawei hardware with any new updates or fixes. This is a devastating blow to the company. It means in a couple of months time its phones and smart devices will all be stuck on the same version of Android they’re running now forever, and will never receive an update unless Huawei develops its own OS – which is no small task. Further problems come from the company being severed from Google’s services, such as the Play Store – where apps can be uploaded and downloaded – meaning they will also have to develop their own app marketplace. Further still, US companies such as Facebook, Instagram, WhatsApp, and Twitter will no longer be allowed to provide updates and fixes for Huawei devices, meaning that these will quickly out-date and become redundant.
And it’s not just software that’s the problem. Huawei has invested over $11bn in US components for their devices, from Gorilla Glass for their phone screens, to Intel processors for their laptop range. After a private warning last year from the US Government, Huawei has purportedly stockpiled three months’ worth of components, but, going forward, this certainly isn’t enough to keep up with the huge demand for their products. Not only will the company have to start design its own software now, but also a lot of its hardware and components.
These problems don’t just affect Huawei or the US, either. Millions of Huawei owners through Europe and the rest of the world will now be left with outdated and unproducted products.
Considering all these problems result, primarily, from political Issues between Washington D.C and Beijing, it is possible that a trade deal might be reached and relations with US companies repaired. If an agreement isn’t made, however, the consequences for Huawei will be dire indeed.
This whole story speaks fragility of success, as well as the integral role politics plays in every aspect of our lives. Huawei was, for all intents and purposes, dominating the smartphone market and making a large dent in the laptop market too but, in one day, legislation from the other side of the Pacific could mark a decisive end to their success story.
All this before we even start to think about then 5g roll out…….
Following an executive order that gives the federal government the power to block purchases of foreign-made technology deemed to be a security threat, Google announced that it had pulled Huawei’s license to use Android