Reuters states that Google has suspended any business with Huawei requiring the transfer of US-designed or made hardware, software or technical services – apart from any available via open source.

This is a direct result of US President Donald Trump’s executive order that may stop many Chinese companies, including Huawei, from selling to, or buying from US companies.

The Reuters report is here, and GadgetGuy has no further inside information apart from what it has read in recent days. The report uses terms like ‘could’ and ‘may’ but the implications are ‘will’.

Google states that it is “complying with the order and reviewing the implications” without giving many specifics.

Analysts say that means Huawei’s loss of access to Google Android OS, regular OS updates, security patches, and all Google Services, including the Play Store and its g-suite apps.

This is no different from inside China, where Google Android is OK, but the Google Play store and services are not available. Hence Huawei has its own EMUI User Interface, productivity apps and access to several local Android app stores.

Update 6 PM 21 May

For the next 90-days, Huawei can purchase ‘approved’ American-made goods and services “to maintain existing networks and provide software updates to existing Huawei handsets”. However, “The company is still prohibited from buying American parts and components to manufacture new products without license approvals that likely will be denied”. Reuters.

What could this mean to Huawei?

This could cruel the sales of Huawei phones outside China.

If Google Android is out, then it will need replacing with Huawei’s Android fork using the Android Open Source Project and for Huawei to take on patches and security updates. For the rest of the world, an Android fork – No Pie for you – with no access to the Play Store or Google’s expertise is a deal breaker.

Huawei is also a customer of Sony (camera sensors), Samsung (some screens, and memory), Japan Display (screens), TSMC (SoC), SK Hynix (memory), Nanya (memory), Leica (optics), Qualcomm, Intel, Micron, Skyworks, Qorvo and 40+ more global suppliers with US roots or technology.

Huawei

Yu Chengdong, Huawei’s consumer business group chief, told media in Shenzhen (about recent component shortages).

“We are laying out plans for all our key smartphone parts. Huawei might not manufacture these components directly, but it doesn’t mean we do not own the technology to manufacture them ourselves,” said Yu.

Huawei has a huge $20b R&D budget and is better able to weather the storm – at least in China. It also has smartphone manufacturing in India although the US Executive Order is for the whole company, not its divisions or manufacturing locations.

Huawei

Are other Chinese phone makers so screwed?

It would be trite to say that Trump has specifically targeted Huawei and ZTE. The Executive order uses ambiguous terms of banning, “US Telecoms from using equipment designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.” That is a very broad church!

It is likely that companies that make smartphones but not telecoms infrastructure equipment will not be affected, but we also need to take China’s Made in China 2025 policy into account which effectively mandates 100% Chinese components, technology and IP for any product made or assembled in China by 2025.

OPPO, Alcatel/TCL/Blackberry, Nokia, Lenovo/Motorola, Apple and many more may need to move some manufacturing to countries where such restrictions do not exist. Indeed they may need to restructure ownership to do business in the west.

And we are going to see increasing use of Chinese designed and made components in Chinese assembled smartphones – Kirin versus Qualcomm, Chinese screens versus Samsung and LG screens etc. No doubt these will have similar functionality and made under quality assurance regimens, but there will be a perceived gap between east and west tech.

Whatever the outcome, the Executive order has 150 days to sort it out. Analysts suggest Trump will insist on adherence to the letter of the law.

GadgetGuy’s comment. This is a mess

The primary issue relates to, but is not solely about, protecting and securing the burgeoning US 5G telecoms infrastructure. It means that the US is entitled to reject Chinese technology suppliers (like Huawei and ZTE), or any goods assembled in China by any international company, from its critical infrastructure because these companies may be subject to the laws of China. Theoretically, the Chinese Government could order secret backdoors and vital information exfiltrated.

There are sub-issues about stealing technology and these relate to the inability to buy US tech or components which Google is caught up in.