In what could be a blow to Huawei, today Reuters reports that Google will suspend any business with Huawei, except for hardware as well as software operations which are covered by open source licenses. This means that Huawei will immediately lose access to Android updates and the next set of Huawei phones will not be supplied with Google Play Store and other Google applications, including Gmail. While Android is an open source operating system that phone manufacturers can use for free, Google charges these companies, such as Huawei, a free license to include their Android app store and some other apps on their phones.
According to reports, Google is taking these measures after President Donald Trump used an executive order to declare a national emergency due to US technology threats last Thursday.
At the same time, the company and 68 of its affiliates were included in the list of entities of the Bureau of Industry and Security (BRI). This prevents US companies from selling parts, components, hardware, and software to Huawei without getting a license from the US government.
While Huawei spent $11 billion on the purchase of parts of US-based companies last year, such as Qualcomm, Intel, and Micron, the company designed its Kirin chipsets and Balong modem chips for high-end phones. Both are produced by TSMC.
Huawei could have its Android alternative ready to work
Google’s move could certainly hinder Huawei’s attempt to become the world’s largest smartphone manufacturer by next year. After sending over 200 million phones in 2018 and maintaining momentum in the first quarter of this year (delivering 50% more units year after year), Huawei is now number two on the list after beating Apple; Samsung is the present leader.
The anonymous source quoted by Reuters states that Google is internally discussing which of its services it will deny Huawei. It is said that the Chinese manufacturer is studying the impact of being included in the list of entities.
Yesterday, the company’s founder and CEO, Ren Zhengfei, said US stocks will slightly reduce Huawei’s revenue growth this year to less than 20%. He also said that Huawei is preparing for this type of action by the United States.
In addition to designing their own chips, in the past, there have been reports that Huawei was developing its own alternative to Android. Earlier this year, the head of the company’s consumer technology division, Richard Yu, said that Huawei already has its own operating system ready. However, the same report pointed out that Huawei does not want to be put in the position of using its own operating system. Huawei’s next high-end line, which should include Huawei Mate 30 and Mate 30 Pro, will suffer if Google officially announces that it will cease trading with Huawei.
Last year, the United States government has imposed an export ban on ZTE that almost destroyed the company. ZTE could not purchase hardware, software or components from the United States until an agreement was reached. Prior to the ban, ZTE was the fourth largest smartphone provider in the U.S but left the list after the imposition of the ban and has not yet returned.
Last week, the president raised tariffs on hundreds of billions of Chinese imports from 10% to 25%. He also threatened to add smartphones and other technology products in the next level of Chinese products to receive a 25% fee. While companies and consumers in the U.S bear the cost of tariffs, they have also had a negative impact on the Chinese economy.
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