Google surprised the tech world on May 19th with the announcement about the suspension of business with Huawei, a company that has been subject to persecution during the Trump administration.
Since Trump was a candidate, he has accused China of “raping” the United States. In this year, his government has attacked the Asian giant with an increase in tariffs on Chinese products. Markets around the world have trembled at the uncertainty of how the conflict will be resolved and how long it will last. China is ready for a war of attrition, while Trump wants at least a small victory to American voters.
Given the urgency of the U.S. government, Trump added Huawei to a list of firms that are prohibited from trading with U.S. companies, which led to Huawei can no longer receive the latest Android updates, or buy essential components for their products such as Qualcomm and Intel processors.
In this trade war, the United States has accused Huawei of committing espionage in collaboration with the Chinese government; has pressured other countries not to adopt Huawei’s technology, claiming security dangers, and ordered the CFO of the company to be arrested for allegedly trading with Iran. Huawei has denied all the accusations, but this has not saved him from being a victim in the crossfire of the US-China trade war.
The particular savagery of the Trump administration against Huawei seems to stem from the rapid growth of the Chinese company. Huawei has 30 years in the market, but recently its sales have exceeded those of Apple and have taken a significant percentage of sales to Samsung. To its rapid growth are added the advances it has made with the 5G network, which will have vital importance in the future because it is the network that would be used for the Internet of Things.
What is Huawei’s answer?
Google’s announcement will stop this upcoming Huawei race. Also, we add that other companies that sell microcomponents to Huawei have joined the ban. Rosenblatt Securities analyst Ryan Koontz believes that Huawei will have severe problems without those essential components made in the United States unless it has a large reserve stock.
Huawei CEO Ren Zhengfei told the media that “We were already prepared for this.” “Given the probability that we could no longer use these systems, we anticipate. It was our plan B, but of course, we prefer to work with the ecosystems of Google and Microsoft. “
Since April, Huawei had announced that it was working on an alternative for Android. An anonymous source told the South China Morning Post that “The company started building its operating system after a U.S. investigation into Huawei and ZTE in 2012.” The same source said that “Huawei also has its operating system for tablets and personal computers.”
“Huawei has been working hard on developing its App Gallery and other software assets similarly to its work on chipset solutions. There is little doubt these efforts are part of its desire to control its destiny, “said Ben Wood, from the CCS Insight consultancy. However, not all are optimistic about what may result.
Vlad Savov says in The Verge that “Trying to sell smartphones without the collaboration of Google in modern times is a spectrum that goes from bad to disastrous. Windows Phone, Palm OS, MeeGo, Symbian, Bada (later Tizen), and BlackBerry O.S. are some of the corpses that Android has produced. “
What will happen to the users?
Huawei said it will continue to provide updates and support to all its products that are now on the market.
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,
Huawei will continue to provide security updates and after sales services to all existing Huawei and Honor smartphone and tablet products covering those have been sold or still in stock globally. We will continue to build a safe and sustainable software ecosystem to provide the best experience for all users globally.Huawei’s Press Release
Google has confirmed this information. Trump decided to sign a three-month window before applying the measures. However, it is likely that Huawei prefers not to rely more on the United States.
China seeks new markets
The rhetoric of the United States, where it points to China more as an enemy than as a commercial partner, has motivated China to secure new markets, a wise decision in a moment that the U.S. is treating more tech companies of China.
Creating new markets has been part of the plan for the New Silk Road, a plan to create business opportunities in developing economies such as Latin America. This initiative could reduce the blow for Huawei, a company that obtains half of its income from sales abroad.
China has had a growing interest in Latin America in recent years. The Asian giant’s investment in the region increased by more than 15 billion dollars in the first half of last year, while in the United States, China investment fell below 2 billion dollars, according to TechCrunch.