President Trump sent shockwaves throughout the tech industry last week with an executive order declaring a national emergency and banning US companies from doing business with companies deemed a national security risk. Days later, the effects began to be apparent as companies from Google to Intel took action to comply, pulling Huawei out of supply chains and preventing it from using US software.
This development could have significant and long-lasting repercussions for the entire technology industry, but there are still several questions without definitive answers. Here are some of our most immediate:
1) What if you have a Huawei device right now?
Google has said that Google Play Services and the app store will continue to work on Huawei devices, so your phone should continue to function normally. However, you almost certainly shouldn’t expect an Android Q update or other platform-level updates, as that would require approval from Google.
If you were thinking of buying a new Huawei phone in the meantime, we wouldn’t recommend it until we have more information. But if you’re sure you want that P30 Pro camera, for example, you can at least rest assured that you shouldn’t miss out on any out-of-the-box functionality.
2) Is this situation likely to be resolved?
The action taken by Google and others is the direct result of an executive order from one of the least predictable US presidents of all time, making it a suspicion of what could happen next. Much will depend on China’s reaction. Huawei is the largest smartphone supplier in China, and while Google’s ban by itself will not affect that market, the company continues to rely on components from other US vendors who are now refusing to do business.
Outside of its local market, Huawei is arguably the most successful Chinese consumer brand yet. It is typically the second largest phone provider in the world, based on how it competes with Apple in a given quarter. China has the nuclear option to reciprocate with the action against Apple, which sounds outlandish, but could be a useful bargaining chip to restore normalcy.
3) What is Huawei’s plan B?
It has been known for a long time that Huawei has been working on a backup operating system that it would switch to precisely in this eventuality. However, it is less clear what that operating system would look like in practice. Huawei already distributes a version of Android without Google in China, where Google services are banned, and the obvious move would be to ship that elsewhere as well. But some reports, as well as Huawei itself, have implied that the plan-B operating system could be a more radical break from Android’s open source codebase.
Because Huawei creates its own smartphone CPUs through its HiSilicon subsidiary, the company may be looking to gain a technical advantage through vertically integrated development that takes advantage of a tight marriage between hardware and software. However, the company’s dominance outside of China is unlikely to be sufficient to gain support for a new operating system outside of the Android ecosystem. It’s hard enough for developers to put their apps on Amazon’s Fire devices. Of course, Huawei would also have to find non-US replacements for the other components it relies on in its phones.
4) What about honor?
Honor is a smartphone brand operated independently of Huawei’s own smartphone division, but it is still owned by Huawei and makes heavy use of the parent company’s technology and supply chain. There’s no real reason to think that it wouldn’t come under the same scrutiny as Huawei, but Google may treat it as a separate OEM for licensing purposes. We have reached out to comment.
5) What about Microsoft?
If Google considers itself legally incapable of doing business with Huawei, it’s hard to see how Microsoft couldn’t come to the same conclusion. Huawei’s Windows laptops are highly regarded, and unlike their phones, they are actually sold in the United States. We reached out to Microsoft for comment, but if there is a loophole that allows the company to continue selling Windows 10 licenses to Huawei, we don’t know.
6) Are other Chinese companies next?
The executive order did not specifically address Huawei, and since some of the concern surrounding the company relates to Chinese law requiring local companies to cooperate with the government, other Chinese companies could, in theory, be affected. However, the US Department of Commerce selected Huawei last week for inclusion on the Bureau of Industry and Security’s Entity List, which details companies deemed a potential threat to national security.
ZTE, a smartphone and telecommunications equipment maker that competes directly with Huawei, has already had its own problems with the US government. But the company was caught violating trade sanctions and later failed to abide by the terms of its own. punishment, which led to a severe but slightly less controversial response from the United States. The two parties finally reached an agreement for ZTE to stand up. The two situations are not directly comparable, but Chinese companies like Oppo and Xiaomi will likely be on the edge nonetheless.
7) What does this mean for the global launch of 5G?
Huawei is a leading provider of 5G network equipment, at least in countries where the United States has not convinced not to use them, and much of them depends on US providers such as Intel, Broadcom and Xilinx. The trade ban could certainly delay Huawei’s moves to supply 5G equipment to countries around the world, and the business of American companies, in turn, could be adversely affected.
Bloomberg reports that Huawei has accumulated at least three months of components in anticipation of this situation, but beyond that, the company may need to look for alternatives.