How Effective is the US Strike on Huawei?

21.05.2019

The decision of US President Donald Trump to impose technological sanctions against Chinese IT leader Huawei was absolutely unexpected. Now it seems to lie on the surface, simple and even natural, although only recently it was hardly possible for anyone to imagine such a thing. Indeed, in the modern technological world, all aspects are closely intertwined: it is impossible to imagine a modern smartphone without the Android or MacOS operating system, processors from Intel or Qualcomm.

The world did not notice how it became very dependent on the leading companies in the digital industry. We can no longer imagine life without Microsoft Windows, used on almost every user computer. And the introduction of the first technological sanctions against Huawei has shown how strongly the spheres of high and even simple household technologies now depend on world giants in China and the United States.

The long-suffering Huawei, which has been under pressure from the United States for more than six months, received a new powerful blow. There is confidence that the company will be able to recover from it, but the price can be extremely high.

Decision

The new radical demarche of the United States against China in a trade war on May 20 was reported by Reuters. President Donald Trump had previously introduced in the United States a state of emergency to protect America’s telecommunications networks and in the interests of national security. Chinese IT giant Huawei was included in the black lists along with about 70 more companies. The main thing is the termination of Google’s cooperation with Huawei, that is, in fact, the Chinese company’s disconnection from the Android operating system.

In fact, nobody expected this. Sanctions against Huawei by the United States, for example, freezing accounts and a ban on entry to America for a number of top managers is one thing, but disconnecting from Android, which should paralyze the company, is quite another. In fact, this means that smartphones from the most successful manufacturer of gadgets in the world should turn into useless pieces of plastic: the operating system on them, even if it has open source, will not receive official updates. Owners of Huawei gadgets also will not be able to use the app store, maps from Google and many others.

Moreover, Trump decided to cut off the oxygen of Huawei, not only in terms of software, but also in terms of hardware. Getting into the black lists for the company means that it loses the chips from the world leader - the American company Qualcomm, which will cease cooperation with the Chinese giant. Also banned for Huawei accessories from Xilinx and Broadcom. In short, everything was conceived as a terrible blow to the Chinese company.

Has the strike reached the goal?

Analysts around the world are now wondering how much a blow to Huawei will be critical for the company. The company itself assures that they will emerge from the situation with their heads held high, and all measures by the United States will be leveled by their own developments in the foreseeable future.

If successful, the actions of the Trump administration can have serious consequences for the global semiconductor industry. Intel is the main supplier of server chips for a Chinese company, Qualcomm provides it with processors and modems, Xilinx sells programmable chips used for network connections, and Broadcom is a supplier of switching chips - another key component in some types of networks.

However, not all companies refused Huawei. Thus, the German Infineon Technologies AG announced that it will continue deliveries to the Chinese, with a similar statement made by the Austrian AMS AG. The very same blow of Trump on Huawei boomerang beats on the companies-suppliers, because they have broken contracts for the sale of chips.

Blocking sales of Huawei critical components can also disrupt US chip manufacturers, such as Micron Technology Inc., and slow down the deployment of mission-critical 5G wireless networks around the world, including in China. This, in turn, could hurt US companies, which are increasingly dependent on the growth of the world's second largest economy.

But the main thing is that China has long been fighting for its digital autonomy and independence. For example, Google services in the country are already not in high esteem - they are banned, and Chinese analogues have come to replace them long ago. The same applies to the operating system - China has analogues. Moreover, Chinese programmers may well replace the missing links in the operating system with their own groundwork, which in China can function even more successfully and efficiently.

Analysts also believe that the main problem for Huawei in terms of US sanctions will be the European market. There is a great demand for American services on Chinese devices. Trump's goal is to slow down the development of the European market with Chinese hands, slow down the creation of 5G networks and force Europeans to buy, for example, Apple gadgets, rather than Huawei.