When the US imposed a trade ban on ZTE last year, it almost caused the Chinese company to go bankrupt. While Huawei may last longer than its compatriot, it might not take long before the company is also brought to its knees. Google has already been reported to stop licensing its proprietary Google Play components for future Huawei phones. Now silicon makers like Qualcomm and Intel are also temporarily cutting ties with China’s biggest tech company and the world’s second largest phone maker.
US President Trump made good his threats on Huawei and has added the company to a roster of companies blacklisted from doing trade with US companies. This has already resulted in Google withholding important parts of the Android experience and now chip makers are reportedly stopping sales of products to the beleaguered Chinese network and mobile equipment maker.
Intel provides processors for Huawei’s server products while Qualcomm supplies processors and modems for its mid-range phones. Xilinx and Broadcom provide components that Huawei uses for its networking equipment and business. Huawei has prepared for such an eventuality and stockpiled these components so that it could last for at least three months. No one knows, however, how long this situation could last.
Huawei has recently been increasing the development and production of its own chips exactly to reduce its reliance on such US companies. However, it is far too early in the game for it be considered safe. Its business will still be crippled severely if the ban persists.
Huawei has been under the US government’s crosshair for years, accused of aiding the Chinese government in espionage. Many political and economic analysts, however, also see Huawei as a pawn and bargaining chip in the two country’s trade spat. And while Huawei is the direct casualty of this ban, the effects will ripple out not only to the Chinese economy but even to the global networking and mobile markets as well.