US relaxes trade restrictions on Huawei, founder 'uninterested'
90-day fix comes just 24 hours after Google complied with US blacklist
The US government has temporarily lifted restrictions placed on Huawei, allowing the Chinese company to buy from American firms until 19 August on limited terms.
While the organisation can now continue to buy US equipment to maintain telecoms networks and provide software updates to Huawei phones already in circulation, it's still unable to buy hardware or software for the creation of new products.
"In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks," said US Secretary of Commerce Wilbur Ross in a statement on Monday.
The easing of the restrictions placed on the company seems to indicate a realisation of Huawei's command on the global supply chain. Cutting it off from trade while giving other companies no time to prepare would lead to immediate consequences for customers.
"The goal seems to be to prevent internet, computer and cell phone systems from crashing," lawyer Kevin Wolf, a former Commerce Department official, told Reuters. "This is not a capitulation. This is housekeeping."
Huawei founder Ren Zhengfei responded to the announcement by saying the US government underestimates the company's capabilities and that the slight U-turn on the restrictions means little as Huawei is capable is manufacturing its own chips anyway.
Ren did, however, show gratitude to the US firms with which Huawei does business and helped lobby the government to cooperate with Huawei, at least temporarily.
"In such a critical moment, I'm grateful to US companies, as they've contributed a lot to Huawei's development and showed their conscientiousness on the matter," said Ren speaking to Global Times. "As far as I know, US companies have been making efforts to persuade the US government to let them cooperate with Huawei," he added.
Huawei had been preparing for the ban for months, according to reports. According to The Information, has been stockpiling parts from US manufacturers that are used across its product range, from enterprise hardware to consumer electronics. One source told the outlet the company has enough inventory to last 12 months and has also been building stronger relationships with suppliers from the EU and Japan.
Google has confirmed the easing of trade restrictions will also apply to Google and Android in all regions outside of China. Huawei phones such as the new P30 line will remain safe and secure with Android updates until the license has expired, giving recent buyers a sense of calm, if for a short time.
"Keeping phones up to date and secure is in everyone's best interests and this temporary license allows us to continue to provide software updates and security patches to existing models for the next 90 days," a Google spokesperson told IT Pro.
"I think this is a reality check," Douglas Jacobson, a trade lawyer, told Reuters. "It shows how pervasive Huawei goods and technology are around the globe and if the U.S. imposes restrictions, that has impacts."
Huawei spent around $11 billion on components from US firms such as Micron and Qualcomm in 2018 out of the company's total $70 billion components spend.
20/05/2019: Google's Android ban neuters Huawei smartphones beyond China
Google suspended business with Huawei on Sunday, ceasing the supply of hardware, software and technical services in accordance with President Trump's executive order imposed last week.
The ban applies to all Huawei devices outside of China and will take immediate effect, meaning that anyone who buys a Huawei phone, like the newly-released P30 line, as of today will not be able to use apps such as Gmail, Drive, YouTube and the Play Store.
The news comes as a potential hefty blow to Huawei's Western business which, according to Canalys, accounts for roughly 50% of its entire smartphone market share. The move will significantly limit the potential of new Huawei phones outside of China s when it comes to tapping into popular Google apps.
"This move will have critical impact toward Huawei's business around smartphones," said Charlie Dai, principal analyst at Forrester. "Huawei has its own mobile OS as a backup, but it's not fully ready yet and it's very difficult to build up the ecosystem as what Huawei has been doing on Android. Eventually, it's no good toward consumers around the world, and It's a pity that customer value facilitated by open source spirit is now ruined by the politics."
Existing Huawei owners will still be able to download app updates if they already have the unsupported apps installed, Google confirmed, as well as receiving OS updates. "We are complying with the order and reviewing the implications," the Google spokesperson said.
"For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices," the spokesperson added.
Google services were already unavailable inside China so the move from Google is a significant one for Huawei's position in Western markets, essentially cutting ties completely with the Chinese tech giant.
The news raises question around the potential duration of the ban. In April last year, the US government imposed a seven-year ban on ZTE components which was later overturned fairly quickly, leading some speculation that something similar could happen in this situation too.
It's also been reported that Huawei preempted the ban by creating its own proprietary technology for the past few years as a contingency plan or a potential Android ban. Some of this technology is already implemented in Chinese products but the company declined to comment further on this.
"Huawei has made substantial contributions to the development and growth of Android around the world," the company said. "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," it added. "We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally."
It's also been reported that Intel, Qualcomm and other chipmakers have confirmed internally that they too will no longer supply Huawei with equipment. Intel supposedly provides chips for Huawei's server products while Qualcomm provides chips for the company's mid-range smartphones, although Huawei declined to confirm this, so the company will be impacted even further in this regard.
Huawei also reportedly stockpiled three months worth of smartphone chips and hardware as part of its contingency plan so it can continue manufacturing devices while American companies are uncooperative.
The chipmakers' withdrawal from trade raises more questions about other US-based companies on which Huawei relies for their devices, namely Microsoft and whether Windows will cease updating on Huawei laptops such as the MateBook X Pro.
The end of such security updates would be a damning blow to users that rely on regular updates to keep their device secure from vulnerabilities and would also act as another dagger in the heart of Huawei's Western device market share.
Huawei's smartphones will still have access to the open source version of Android through an open source license called Android Open Source Project (AOSP) that will be free to all. This comes with the caveat a lot of open source software has to face, which is that this particular version of Android won't be as frequently or expeditiously updated as the official version, again, leaving users vulnerable to security vulnerabilities.
The open source nature of this OS has led some users to think that the banned apps could be side-loaded through Android Application Packages (APKs), effectively bypassing the limitations of Google's ban. However, this isn't the case as developer focussed website XDA-Developers pointed out that users will not be able to simply side-load APKs for the desired services as Google prohibits CTS-unverified devices from running them.
With the executive order now in full force, we can no longer recommend the purchase of any Huawei consumer device until the parameters of the ban are fully clarified. Businesses and individuals that choose to purchase a Huawei phone or tablet from today onwards risks the device being effectively unusable when it comes to native Google apps and those that are accessed through the Play Store, as well as pose a security risk from a revoking of access to future versions of Android.
G-suite is used by many businesses across the UK and worldwide with many users conducting business on the move, relying on mobile access to the suite of tools including Google Docs, Sheets and Drive.
For companies reliant on those tools, having them blocked would make Huawei's phones somewhat ineffective for business outside of China. Furthermore, having no access to the Play Store means access to non-Google productivity tools, such as Microsoft's Office suite, become effectively blocked.
According to market research from Canalys, Huawei ranks second behind Samsung for international shipments of smartphones in Q1 2019 and reached a record smartphone market share in both Western Europe and in Central and Eastern Europe regions. "Huawei smartphone supply freeze would trigger serious channel and market disruption," the company said in a tweet.
The company overtook Apple in terms of the number of devices shipped by quite a large margin, 20 million devices to more specific. It managed to accomplish this amid fierce allegations being fired at the company for the better part of a year, the same allegations that have escalated to reach this end.
It all started when the US allegedly found security flaws in Huawei's telecoms infrastructure and later calling the world to boycott the Chinese company's equipment entirely. Australia followed suit, one telecoms company in New Zealand also did but other countries have remained a little more sceptical.
The scepticism has proved to be unfounded as no evidence of the security issues to which the US refer has been made public. The US thinks that 'backdoors' have been implanted in the telecoms equipment which the Chinese government could exploit for a state-sponsored cyber espionage campaign.
Chinese security law dictates that all Chinese companies must hand over information to the government if it's requested which, when you consider that Huawei has a foot in roughly 60% of all telecoms networks worldwide, could potentially yield a frightening slew of sensitive data of citizens and governments the world over. This is why the US and Australia are worried.
However, Huawei produces widely-used telecoms equipment, some of which has been seen as core to facilitating the rollout of 5G connectivity. Vodafone, for example, will use Huawei tech for its upcoming 5G launch in the UK in the next few weeks and it's reported that the government has signed off on the inclusion of its tech for national infrastructure.
This is why it's difficult for nations to reach a decision on the matter, countries are being pulled in one direction from security concerns and pulled in the other as pressure mounts to build 5G networks to keep up with global technological advancement.
Make no mistake, this is huge news. Depending on how long the ban takes effect, it could potentially hurt Huawei's growth in a significant way. Huawei's founder Ren Zhegfei said on Saturday, the day before Google's announcement, that the company's growth "may slow, but only slightly" due to US sanctions. We expect this his perspective may have shifted now, though.
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