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‘Insurmountable’ blow to Huawei

One of the world’s biggest telcos is scrambling to salvage its global operations after a move from Donald Trump left it high and dry.

Controversial Chinese telecom giant Huawei must be feeling very lonely right now.

Long held national security concerns harboured by Western countries including Australia, coupled with a trade war between Washington and Beijing, have left the rising smartphone and telecommunications company without many friends.

The trade war well and truly hit consumers last week when the Trump administration put Huawei on the naughty list, which effectively means US companies can’t sell Huawei technology without permission from the White House.

As it stands, Huawei — the second biggest smartphone maker in the world after recently dethroning Apple — will no longer be able to use Google’s Android operating system and the suite of apps that populate smartphones around the world including Google Maps and Gmail.

The ban will also hinder its network equipment business, which relies on technology from US companies such as computer chips.

In a world with globalised supply chains, this is what the experts call weaponised interdependence.

The impact has thrown a spanner in the works for Huawei’s global operations as companies in Britain and Japan have been forced to halt co-operation amid uncertainty about its products.

Four major Japanese and British mobile carriers have said they will delay releasing new handsets made by Huawei amid the US-led crackdown.
 

Washington last week imposed a ban on the sale or transfer of American technology to the firm, which could impact hundreds of millions of Huawei phones and tablets around the world. Picture: Emmanuel Dunand
Washington last week imposed a ban on the sale or transfer of American technology to the firm, which could impact hundreds of
millions of Huawei phones and tablets around the world. Picture: Emmanuel DunandSource:AFP

 

NO WAY, HUAWEI

Japan’s Panasonic said on Thursday it was halting business with Huawei, joining a growing list of firms distancing themselves.

“We’ve stopped all business transactions with Huawei and its 68 group companies … that are subject to the US government ban,” Panasonic spokesman Joe Flynn said.

British mobile network operator EE, owned by the BT Group, was due to bring Huawei’s first 5G phone to Britain in the coming months but that now looks to be in jeopardy.

EE chief executive Marc Allera said that the company had “paused” the launch of Huawei’s 5G phones “until we get the information and confidence and the long-term security that our customers … are going to be supported”.

The group also said it would phase out the use of Huawei equipment in the most sensitive “core” elements of its network infrastructure.

Vodafone soon followed suit, announcing it was suspending pre-orders of Huawei 5G handsets.

“We are pausing pre-orders for the Huawei Mate 20X in the UK. This is a temporary measure while uncertainty exists regarding new Huawei 5G devices,” a spokesperson said.

Meanwhile British firm ARM, which designs processors used in most mobile devices, is also said to be set to suspend ties with Huawei.

Staff at the firm were told to suspend “all active contracts, support entitlements, and any pending engagements” with Huawei, according to internal documents seen by the BBC.

This is a big deal for Huawei. As Wired put it: “Huawei could arguably survive without Google. Without ARM? Not so much.”

One analyst described the move, if it became long-term, as an “insurmountable” blow to Huawei’s business.

RELATED: Ban could force Huawei toward ‘plan B’ for its smartphones

In Australia, Huawei execs have tried to assuage fears held my smartphone customers by claiming the ban will only impact future models and those using existing handsets would still have access to the Google Play store and other apps.

But questions remain about getting access to Google’s next version of Android software and possibly not being able to get important security patches into the future.

Huawei made a huge and concerted push into the Australian market with it latest flagship device, the P30 Pro, which was released earlier this year. But compared to the European and Asian markets, the company’s smartphone business is much less known Down Under and only has a very small market share.

Australian telcos were reportedly blindsided by the ban and are taking a wait-and-see approach. Huawei’s technology is already banned in Australia’s 5G rollout and telcos haven’t publicly committed to stocking any Huawei devices that are due out later this year.
 

The Huawei Mate X foldable 5G smartphone on show during the Mobile World Congress this year. Picture: Manu Fernandez
The Huawei Mate X foldable 5G smartphone on show during the Mobile World Congress this year. Picture: Manu FernandezSource:AP

 

 
The launch the Honor 20 Series smartphones. Picture: Tolga Akmen
The launch the Honor 20 Series smartphones. Picture: Tolga AkmenSource:AFP

 

Japan’s number two and number three telco providers, KDDI and SoftBank Corp, said their decision to delay the release of Huawei handsets was taken to give them time to assess the impact of the White House ban.

The country’s biggest carrier, NTT Docomo, also announced it was suspending pre-orders for a new Huawei handset, but stopped short of halting the release itself.

As the world turns away from it, Huawei said in response that it recognised “the pressure” placed on its suppliers, and that it was “confident this regrettable situation can be resolved.”

DIRE THREAT

Japan’s SoftBank had been due to release a Huawei-made smartphone on Friday, but halted the release “because we are currently trying to confirm if our customers will be able to use the equipment with a sense of safety”, company spokesman Hiroyuki Mizukami told AFP.

“We still don’t know when we will be able to start selling,” he said, adding the Japanese carrier is concerned about “everything” linked to the US ban.

Japanese carrier KDDI said its release of the Huawei P30 lite Premium planned in May will also be postponed, with spokeswoman Reiko Nakamura saying: “We’re checking the facts on how (the US decision) was made and its impact.”

Last week President Trump declared a “national emergency” empowering him to blacklist companies seen as “an unacceptable risk to the national security of the United States” — a move analysts said was clearly aimed at Huawei.

The US Commerce Department also announced an effective ban on US companies selling or transferring US technology to Huawei.

US officials this week, however, issued a 90-day reprieve on the ban on dealing with Huawei, saying breathing space is needed to avoid huge disruption.

Washington has long suspected deep links between Huawei and the Chinese military, and its moves against the company come amid the churning trade dispute between the world’s top two economies.

The issue has also been the source of heated controversy in Britain ever since a leak from the country’s National Security Council (NSC) last month suggested the government was planning a limited role for Huawei in its 5G network.

US Secretary of State Mike Pompeo warned Britain during a visit to London that it risked undermining the historic allies’ intelligence sharing.

Source: News Corp Australia Network:

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