A huge blow for Huawei.
According to Reuters, Alphabet Inc’s Google has suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing—This is after the U.S. government added the Chinese tech company to its Bureau of Industry and Security (BIS) blacklist around the world.
Google will stop providing Huawei with access, technical support and collaboration involving its proprietary apps and services. Future versions of Huawei smartphones running on Android will also lose access to popular services including Google Play Store and Gmail and YouTube apps, a Reuters exclusive noted.
The Chinese company in a great shock as commerce department after president Donald Trump on May 15 declared a national emergency to “deal with the threat posed by the unrestricted acquisition or use in the United States of information and communications technology… supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries.”
On May 16, the U.S. Department of Commerce added Huawei and its affiliates to the BIS Entity List. This blacklist makes it more difficult for Huawei to conduct business with U.S. companies—the addition of Huawei to the blacklist means U.S. companies can no longer sell or transfer technology to Huawei without a license issued by the BIS.
Over the weekend, Huawei founder and CEO Ren Zhengfei explained he has refused to bow to US pressure., Ren said his company had “already been preparing for this.” Huawei has come under immense US pressure following allegations it allows Chinese intelligence agencies to use backdoors in the software. The accusations prompted the Chinese Foreign Ministry to denounce Western “hysteria” .
“We have not done anything which violates the law,” Ren told Japanese business daily The Nikkei. “It is expected that Huawei’s growth may slow, but only slightly.” Huawei is said to be a pioneer of 5G technology but relies heavily on foreign suppliers. The company buys about $67 billion (€60 billion) worth of components each year, including about $11 billion from US suppliers, according to The Nikkei.
Huawei had developed its own operating system in case it lost access to Google and Microsoft services. Some of this technology is already being used in products sold in China, Huawei has said.
Nevertheless, Google’s decision could have an adverse impact on Huawei’s sales outside of China, particularly in the West. The Chinese company’s European business, its second-biggest market, could be hit as Huawei licenses these services from Google in Europe.
But the extent to which Huawei will be hurt by the US government’s blacklist is not yet known as its global supply chain assesses the impact. Chip experts have questioned Huawei’s ability to continue to operate without help from the United States.
Indeed the U.S. bans could kick a leg out from under Huawei, since until this month it was dependent on American suppliers like Qualcomm. That could give companies like Apple a better chance in China, even if it will still have to deal with price obstacles and local brands like Xiaomi, Oppo, and Vivo.