S&P says U.S. tech firms could wind up as collateral damage in Huawei ban

S&P says U.S. tech firms could wind up as collateral damage in Huawei ban
CNET reports that the boomerang effect from Huawei's placement on the Commerce Department's Entity List is going to be bad for U.S. tech firms. This is according to credit rating agency S&P. Huawei's placement on the list last month means that the manufacturer is unable to obtain U.S. parts and software without a license granted by the U.S. government. While Huawei is still running on a limited 90-day reprieve, its newer handsets will have to use an Android alternative developed in-house. While it might have a year's worth of chips at its disposal, after the parts are gone it might have to rely on an open source chip architecture to replace the one from ARM Holdings that it used to employ on its Kirin and Balong chips.

There is no question that the ban is going to seriously cripple Huawei's ability to remain a leader in the smartphone industry. The company was the second largest manufacturer of connected handsets in the first quarter of this year with a year-over-year growth rate of 50.3% compared to a 4% drop for the entire industry. At that rate, Huawei would have been the largest smartphone producer in the world by next year. According to the worst case scenario calculated by Strategy Analytics, Huawei could see its phone shipments drop from 206 million last year to 125 million in 2020.

However, S&P says that the ban could end up having a negative impact on growth in the U.S. tech industry. Huawei spent $11 billion on U.S. supplies in 2018, and that alone is revenue that will be lost to U.S. companies. Firms like Google, Qualcomm, Micron, and others will lose the revenue that they collected from Huawei. And even if Huawei is removed from the Entity List in the future, it will have developed new suppliers, its own operating system and App Store, and redesigned its chips. As a result, depending on when (or if) the ban ends, Huawei could be self-sufficient and no longer need parts and software from U.S. tech firms to survive.

Huawei seeks more than $1 billion from Verizon


While President Donald Trump said last month that U.S. security was the reason why Huawei was placed on the Entity List, he also said that the company could be used as a bargaining chip to get better terms from China in any negotiations over a trade agreement.  For years now, Huawei has been considered a threat to U.S. national security since it can be forced to spy on consumers and corporations at the behest of the communist Chinese government. Rumors that Huawei devices contain a backdoor ready to send intelligence to Beijing have never been proven and have always been denied by the company. The U.S. has told its allies not to allow their wireless providers to use Huawei networking equipment for their 5G networks.

Huawei alleges that Verizon owes it over $1 billion in licensing fees

Huawei alleges that Verizon owes it over $1 billion in licensing fees


In a related matter, Reuters reports that Huawei is seeking more than $1 billion from Verizon. The company claims that the nation's largest wireless provider used more than 230 of its networking equipment patents without a license. The patents cover core network equipment, wireline infrastructure to internet-of-things technology. Representatives of both firms met in New York last week to discuss the patents. They both also discussed whether networking equipment made by other companies and used by Verizon infringe on Huawei patents. Verizon spokesman Rich Young said, "These issues are larger than just Verizon. Given the broader geopolitical context, any issue involving Huawei has implications for our entire industry and also raise national and international concerns."

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9 Comments

1. maherk

Posts: 6703; Member since: Feb 10, 2012

"Rumors that Huawei devices contain a backdoor ready to send intelligence to Beijing have never been proven and have always been denied by the company." On the other hand, the American government has been found, and on numerous occasions, to be spying on everyone, from their citizens, to their closest allies. Trevor Noah last month had a segment showing that this war against Huawei is all based on the Benjamins, and has nothing to do with national security. Huawei is way ahead the competition in the 5G race, that'll end up costing the US an excess of 500 billion dollars, and that's why they're targeting Huawei and only Huawei in this trade war. Why Huawei is singled out, a company that the US has never provided concrete evidence against them that they're spying on their users. While other Chinese companies that were found to be spying on their users and sending their data to private servers in China, like OnePlus and Blu, are free to provide their services in the US?

3. vikingsfootball09

Posts: 111; Member since: Oct 02, 2013

thats the thing...the u.s. is like a cheating husband always accusing his wife of cheating LOL

6. TBomb

Posts: 1181; Member since: Dec 28, 2012

If you hate it so much, move. If you don't live in the US, then stop spitting the same comments about hypocrisy over and over. You're not the first one to say it and everyone who cares has already heard your comments.

7. maherk

Posts: 6703; Member since: Feb 10, 2012

I can say the same about your comment, if you don't like our comments that explains why your government is showing such a hypocrisy in this case, then move on and don't engage with such comments that obviously hurts your soft feelings.

8. yann

Posts: 608; Member since: Jul 15, 2010

"These issues are larger than just Verizon. Given the broader geopolitical context, any issue involving Huawei has implications for our entire industry and also raise national and international concerns." That means - everyone in US steal from Huawei and everyone will be judged after that. Us court must not allow Huawei to win. This is american hypocrisy.

9. lyndon420

Posts: 6494; Member since: Jul 11, 2012

He's entitled to his opinion while we still have this thing called 'free speech'...the USA is trying to take that away as well so stick that in your piehole.

2. Diego!

Posts: 859; Member since: Jun 15, 2009

I hope Huawei comes back stronger than ever with new 5G technology and show the world they don't need Google at all. As some other comments are mentioning, there is no single proof Huawei phones are spying on their owners. Meanwhile at any Google device if you're speaking with friends and you say you're thinking about flying to Costa Rica, as soon as you open Google bar the very first spot says: Travel to Costa Rica. Now who's spying on who really?

4. Mikele

Posts: 107; Member since: Nov 19, 2013

What comes around goes around! Huawei stands cleaned in all charges but the Bully wouldn't listen

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