Interview with U.S. Commerce Secretary suggests good news is coming to Huawei and Apple

Interview with U.S. Commerce Secretary suggests good news is coming to Huawei and Apple
Chinese smartphone manufacturer Huawei was placed on the U.S. Commerce Department's Entity List on May 16th for security reasons. U.S. lawmakers consider the company to be a national security threat because of a law in China that could force the firm to gather intelligence on corporations and consumers at the behest of the Chinese government. As a result, U.S. lawmakers are concerned that Huawei's phones and networking equipment contain backdoors that can send information to Beijing. Huawei has denied this and so far there has been no evidence found to prove this.

Being placed on the Entity List means that Huawei is cut off from the U.S. based supply chain that it spent $11 billion on last year. Despite the ban, Huawei still hopes to ship 270 million handsets this year, up 31% from the 206 million it delivered in 2018. While sales outside of China might suffer because Google's core Android apps (such as the Play Store, YouTube, Search, Maps, and Gmail) cannot be installed on newer models like the Huawei Mate 30 series, the company is killing it domestically where Google is a four-letter word. During the third quarter, Huawei was the only major phone manufacturer in China to show any growth on a year-over-year basis. And what a quarter it was for Huawei inside its home country where it benefited from a rise in patriotism among Chinese consumers who feel that the U.S. has been unfairly bullying the company.

Temporary licenses will soon be issued to some of Huawei's U.S. supply firms


Back in May, the Trump administration allowed certain U.S. companies to provide Huawei with supplies "necessary to maintain and support existing and currently fully operational networks and equipment, including software updates and patches." Also allowed were components and software "necessary to provide service and support, including software updates or patches to existing Huawei handsets." But that reprieve was to last for 90 days and it ended in August. The U.S. said that it would issue licenses for another 90-day period, but the Commerce Department was inundated with 206 requests and has yet to issue the exemptions. However, these licenses will be issued soon according to Commerce Secretary Wilbur Ross, who was interviewed today by Bloomberg. During the interview, Ross said that the licenses "will be forthcoming very shortly." The Commerce Secretary added, "That’s a lot of applications-it’s frankly more than we would’ve thought. Remember too with entity lists there’s a presumption of denial. So the safe thing for these companies would be to assume denial, even though we will obviously approve quite a few of them."


And while that could be considered good news for Huawei, some even better news might be coming. Ross said that "Phase one" of a U.S.-China trade agreement could be signed this month. Assuming that Huawei will be used as a bargaining chip by the U.S. to get more favorable terms from the Chinese in such a deal, a trade agreement could lead to the removal of Huawei from the Entity List. Both President Trump and Huawei's consumer group chief Richard Yu have both hinted that the Chinese manufacturer could be removed from the list in this manner.

The deal would see the Chinese buy more agricultural products from the U.S., allow more U.S. financial services firms to enter the Chinese market, and try to keep its currency stable. In return, China would no doubt inquire about having Huawei removed from the Entity List, and it would ask the U.S. to drop the 15% import tax on smartphones imported from China into the U.S. The agreement, if signed by both countries, could be good news for Apple which designs the iPhone in the U.S. and has the majority of units assembled in China. The tariff on handsets was originally set to begin on September 1st, but President Trump moved it back to December 15th so that the tax would not lead to higher prices over the Christmas holiday shopping season. U.S. companies affected by the import tax can pay all, part or none of the additional costs and pass the balance on to consumers by raising retail prices. So far, Apple has eaten the tax on its affected products and has asked for exemptions on some including the Apple Watch and AirPods.

FEATURED VIDEO

16 Comments

1. meanestgenius

Posts: 22388; Member since: May 28, 2014

This would indeed be good news for all involved, and not just Huawei, as U.S. companies stand to lose 11 billion annually due to the ban. It will be great when Huawei isn’t in the middle of this BS political propaganda.

2. Carlitos

Posts: 679; Member since: Oct 23, 2011

I completely feel you, it's hard not to make it political though when Huawei adheres to an authoritarian government

3. Carlitos

Posts: 679; Member since: Oct 23, 2011

Idk why my comment was censored....

5. meanestgenius

Posts: 22388; Member since: May 28, 2014

The U.S. government is no better than China. They are just better at subterfuge. And it’s been proven that certain U.S. companies have backdoors for the U.S.

6. sgodsell

Posts: 7514; Member since: Mar 16, 2013

You are so wrong. China has been manipulating markets, and is always benefiting from others works and patents. Which China doesn't give a crap about patents. In the long run manufacturing has to come back to North America. The reason why it left was because of taxes, and employee wages. Now if any new manufacturing came back to North America, then that company could implement full automated manufacturing. The only manpower you would need is shippers, robotics engineers, and plant maintenance workers. At least some America's could get some work. Right now Apple has no iPhone, iPad, or iPod manufacturing plants in America. This holds true for a lot of companies. At the end of the day, China is for China.

7. meanestgenius

Posts: 22388; Member since: May 28, 2014

If you think that the U.S. isn't as dirty as China is, then I've got a bridge to sell you in Brooklyn. I'll even give you a discount on it and throw in the water under the bridge for free. Then again, you being you, I expected no less from you.

8. maherk

Posts: 6999; Member since: Feb 10, 2012

Except for the fact that Huawei wasn't banned based on patent infringement(something Apple has been caught doing as well), they were banned on false accusations that they're spying on their costumers, something that, and as mentioned in this article, was never proven to be true. Huawei's ban is purely political, don't believe me? Check Trump and Steve Bannon's own words on this ban, they admit that they are only using Huawei as a leverage in their trade talks.

10. notfair

Posts: 761; Member since: Jan 30, 2017

sure, whatever you say Mr. Trump. NO JOBS WILL BE BROUGHT BACK FROM CHINA TO US; this kind of bulls**t you've said is to gain votes from gullible and manipulable voters.

12. mootu

Posts: 1537; Member since: Mar 16, 2017

Even if Apple pulled out of China the manufacturing would not come back to the US. It would end up in another emerging cheap labour country such as India or Vietnam. Trump has already been threatening those 2 countries with sanctions, especially Vietnam.

13. Ashoaib

Posts: 3309; Member since: Nov 15, 2013

Why don't Apple just pay less and hire cheap labor in US? Us has a big population, there will be people willing to work in same wages as China. They can offer a base salary and who ever wants to accept it, will accept it and those who will like to take more, will opt for other options. Same like what they are doing in other countries. They are offering a certain package and if any one want to accept it then they can accept it. If people don't like the offer then they can go to find work with some other company. Apple being a US company should keep all manufacturing in US. Instead of producing in China and creating a trade imbalance, which then US government blame on China. Rather on US companies who are the main reason behind this trade imbalance.

16. jiangqiushi

Posts: 35; Member since: May 28, 2019

you think the US has the needed labor and skills and supply chain to mass produce iPhone there? If Apple do what you suggest, your iphone will cost 3k, will you accept that?

4. Tziggy14

Posts: 625; Member since: Sep 02, 2014

Hope this goes though. This could lead to something where US and Chinese companies both will benefit from.

9. yalokiy

Posts: 1077; Member since: Aug 01, 2016

China could use Apple as a bargaining chip. It would hurt Chinese economy, but it would hurt Apple and US as well.

11. mootu

Posts: 1537; Member since: Mar 16, 2017

It actually would hardly touch the Chinese economy at all, China's economy benefits by around $8 for every iPhone manufactured which is a drop in the ocean for the worlds second largest economy. On the other hand it would be absolutely devestating for Apple and could maybe even finish them as a company, They are completely reliant on China at the moment. This is all hypothetical though as the Chinese just don't work this way.

14. Ashoaib

Posts: 3309; Member since: Nov 15, 2013

You are right bro. It will not hurt China that much in terms of money figures. But it will hurt in loss jobs. Around 40 thousand people will become jobless in China. Which will be a headache for Chinese government to absorb in other sectors in short term.

15. mootu

Posts: 1537; Member since: Mar 16, 2017

If you are talking about Foxconn jobs then don't forget that they don't just manufacture for Apple, they make goods for Huawei, Microsoft, Hewlett Packard, Sony and over 20 other global companies.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.