What Huawei wins and loses in the US-China tech war
Chinese telecom giant Huawei finds itself in the centre of the escalating trade war between the US and China. As many global tech firms have followed the US in halting business with Huawei, the company is sorting out a 'Plan B' - its own operating system (OS).
The US decision in May to ban its companies from selling parts to Chinese telecom company Huawei has triggered global tremours in that sector, which has seen major mobile carriers from the UK and Japan following suit.
Google, where Huawei receives its OS support, also announced it would stop supplying its key features to Huawei phones, including the Android app store Google Play.
The market has seen a drop in the price of Huawei’s products in global outlets.
Dr Stanley Shanapinda, a telecom industry expert of La Trobe University, says ongoing tensions may affect Huawei's bottom line.
“There’s a drop in consumer confidence because of all of these [US actions against Huawei], and it makes the business case for Huawei less attractive. That, in turn, would have an effect on the bottom line - there will be a question about the quality of the phones they would produce,” he says.
Huawei phones are on sale at the Thailand Mobile Expo 2019 on Thursday in Bangkok.
The US government softened on Huawei though shortly after US President Donald Trump announced the executive order banning the Chinese tech giant, giving it a 90-day reprieve before the ban went into effect.
Mr Trump also suggested that Huawei may be included in the US-China trade deal, which continues to be at the negotiation phase.
Huawei soon bounced back, calling US actions of seeing the company as a "security threat" as being based on no evidence. The company recently filed a motion in a US federal court, aiming to speed up the lawsuit it first raised in March.
Amid business suspension with its global partners due to the ban, Huawei is looking into a back-up plan to overcome the market pressure. In late May, news broke that Huawei trademarked “Hongmeng” as its own operating system, replacing Android and is planned to be launched next spring, the company’s head of consumer business Richard Yu told CNBC.
The self-developed OS, which experts said Huawei has been developing since 2012, has been moved up on its agenda to reduce impacts from US actions against the company.
But it is “premature” to see how its own OS will perform, Dr Shanapinda says.
“They would have to make sure it is stable cause they’re going to compete with Android. Huawei is built from Android and that’s what the customers are familiar with,” he says.
“Customers already felt and are indicating that I don’t know how good is gonna be and I better stick with what I know and I try to get a separate phone where I continue with Google Play.”
Dr Shanapinda says the infrastructure process of 5G, if going well, will make Huawei's self-developed OS more stable. In a recent interview with Chinese media, Huawei’s CEO Ren Zhengfei said the US ban would have little impact on the company’s 5G development.
“We have some non-core products for which we haven’t prepared “spare tires”, or Plan Bs,” said Ren in the interview, “the US move will have some impact on these products. But in sectors where we have the most advanced technologies, at least in the 5G sector, there won’t be much impact. Not just that, our competitors won’t be able to catch up with us within two to three years.”
Huawei has been reportedly leading in the 5G building process among its European competitors Nokia and Ericsson.
Huawei’s CEO Ren Zhengfei spoke to Chinese media on May 21 responding to issues clouding his company in the wake of U.S.-China trade war. The 20,000 word interview has been rapidly circulating around on Chinese social media recently.
Huawei was banned from participating in Australia’s 5G infrastructure since last year. But there is an impact on telecom companies who rely on Huawei’s equipment due to the competitive price the company offers.
In a recent merger case of Australian telecom companies Vodafone and TPG, both companies claimed that without Huawei’s equipment, their 5G roll-out will be delayed.
Following the US order, the UK company Vodafone, which is also one of the main mobile service providers in Australia, announced its suspension of pre-orders of Huawei’s 5G smartphones, Mate X. Vodafone in Australia, however, as many others, takes a wait-and-see approach instead.
“We are working with Huawei and Google to understand the implications, if any, to Vodafone customers, however, there is no immediate impact to in-market products,” a Vodafone Australia spokesperson said in a statement to SBS Cantonese.
Huawei made a record revenue of $107 billion last year and performed strongly in its Q1 revenue. It is unclear whether U.S. actions would affect Huawei’s revenue in the rest of 2019.
SBS Cantonese has reached Huawei for comment.
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