In mid-May, the US Department of Commerce included the Chinese phone manufacturer Huawei in the entity list and banned it in its US supply chain. Although this was done for security purposes (Huawei is considered a threat to national security in the US because the Chinese communist government could ask it to gather information), it was thought that it could be used as a currency during trade negotiations between the US and China.
Both countries are involved in a trade war and have imposed import tariffs between them. For example, earlier this month, several China-made Apple devices, including Apple Watch and AirPods, have a 15% tax when they enter the US. Starting December 15th, a similar fee will be imposed on the iPhone. Apple may choose to absorb all or part of the tax and transfer the rest to US consumers to pay higher prices.
Trump changes his mind; Huawei is off the table during trade talks between the US and China
In May, US President Donald Trump said that Huawei’s position in the entity list could be used to help the US get better terms from China in any commercial conversation between the two countries. “So, it’s possible that Huawei even would be included in some kind of a trade deal,” the president said at the time.
Google recently told Reuters that it would not license the Android version of Google Play Services, which includes Google Play Store and its main Android apps, to Huawei for the Mate 30 line. Initially, Huawei planned to become the greatest smartphone maker in the world thanks to its new flagship series; But without the Android version with installed license, it is likely that telephone sales are lagging behind projections. For the first half of this year, Huawei delivered 118 million phones (59 million in the first and second quarters), ranking second behind Samsung. Mate 30 and Mate 30 Pro to be presented on September 19th.
Trump’s position against Huawei seems somewhat contradictory considering the actions taken last year with ZTE, another Chinese manufacturer of telephones and network equipment. Like Huawei, ZTE is considered a threat to national security and was denied access to its US supply chain. After failing to follow the sanctions imposed by the US Department of Commerce. ZTE had violated the US and international sanctions by selling goods and services to Iran. Unable to buy components and software from its US suppliers, ZTE suffered. Thus, a surprise tweet of President Trump in May last year called for the Department of Commerce to reach an agreement with ZTE. The tweet said: “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” Finally, an agreement was reached when ZTE paid $1 billion, took $400 million into custody to cover future violations and renewed the composition of its board of directors and executive suite.
We would be negligent if we did not report that the prohibition against Huawei has a huge economic effect in the United States. Last year, Huawei spent $11 billion on US software, parts and components. And companies like Qualcomm, Intel and Micron will be interested. In fact, Huawei was Micron’s biggest customer last year.
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