Ren Zhengfei the founder and CEO of Huawei is a chairperson who must be under a lot of pressure to resolve issues facing the company he founded. Huawei the worldÃ¢â‚¬â„¢s largest telecommunications manufacturer and the second largest manufacturer of smartphones fell victim to the recent global trade tussle between the United States and China.
Huawei to lose 30billion in US itself, what is the Future of Huawei.
–By Heather McDonald
Ren Zhengfei the founder and CEO of Huawei is a chairperson who must be under a lot of pressure to resolve issues facing the company he founded. Huawei the worl’s largest telecommunications manufacturer and the second largest manufacturer of smartphones fell victim to the recent global trade tussle between the United States and China.
In the month of May Trump signed an executive order that gave power to the relevant authorities to block sales by United States companies to foreign firms deemed to be security risks. As a result, Huawei has been placed on the entity list, this means that the business dealings it can conduct with the United States are limited. The order Trump signed declares foreign adversary threats to communications networks, technology and services a national emergency.
ARM a UK based company that designs chips ceased all business and dealings with the Chinese manufacturer; this has been the case with other multiple retailers and other networks around the world for fear of retaliation from the United States Government.
On May 20, the United States Department of Commerce issued a temporary license for Huawei to continue doing business with US companies. American companies can continue working with Huawei but on temporary basis.
Trump was quoted as saying that if they made a deal with China, he could imagine Huawei possibly being included in it, insinuating that the conflict could be resolved with negotiations. The negotiations would need to start soon as the temporary license is meant to last until August 19.
It is still not clear how Huawei intends to resolve the issue as the United States government considers it a threat to national security. The temporary permit has not revived efforts from companies like Microsoft and Panasonic who are proceeding with other brands with halting dealings with Huawei. Tech Company ZTE had to pause operations last year after a United States ban for violating sanctions on Iran and North Korea left the company in financial trouble.
Microsoft drops Huawei laptops from its online store
Microsoft stopped the sale of Huawei, Mate book x pro on its online store after the United States government blacklisted the company’s business in the US.
This was after the news that Google would be banning Huawei devices such as smart phones and tablets from getting android updates. This could possibly mean that Microsoft, which is a United States company, could also be halting, updates for their laptops. The Standards making bodies that govern technology used for connectivity and mobile storage such as the Wi-Fi Alliance and the SD Alliance are on the same page. Huawei’s Mate book X pro is arguably one of the best Windows laptops currently on the market, without a windows license it will no longer be an alternative to, Apples MacBook pro or Hp Spectre x360 and Microsoft surface lineup.
Huawei’s server solutions affected
Microsoft windows ban will also affect Huawei’s server solutions. Both Microsoft and Huawei operate a hybrid cloud solution for Microsoft Azure stack using Microsoft certified Huawei servers.
Loss of ARM processors
Almost all makes of smart phones, tablets, wearable’s and feature phones all have one thing in common, they use one or more ARM processors. Companies like QUALCOMM, Media Tek, Broadcom, provide silicon procured processors, which Huawei depends on. The ARM processors have become the most essential and indispensable pieces of technology in any device that is not a PC or a data center. The loss of ARM, the processor making company will have the most devastating impact on Huawei. This is because ARM will also not risk repercussions from the United States Government for dealing with Huawei.
Huawei still does not have the capacity to produce its own processors without licenses to use ARM designs and has been pursuing its own chipset designs. There is still no possibility of Huawei to design a chip that does not use ARM because no Software created for mobile phones can run on it. Although ARM is based in the United Kingdom, the Japanese Softbank group owns it.
According to BBC News reports, ARM employees have been instructed to stop all support entitlements, active contracts or any pending engagements with Huawei because of the US trade ban. ARM is concerned it is affected by the ban because it uses technology on its chip designs that is of United States origin. When working with ARM there two ways to use their processors, one is to license a processor design they have created or the second, which is an architecture license where the license does the chip design but is based on ARMs intellectual property.
Huawei’s involvement in 5 G wireless network fears
Countries like Australia and Japan have both raised concerns and have gone ahead to stop Chinese vendors providing or participating in 5G deployments in those countries. Taiwan has issued guidelines banning the use of mainland Chinese telecommunications equipment. In South Korea, only one carrier has adopted Huawei equipment for their 5G needs due to their affordable prices and to avoid upsetting the two countries delicate diplomatic relationship, the other two carriers declined due to security concerns.
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Concerns about the Chinese involvement with the 5G network originated from allegations that cellular network equipment sourced from Chinese vendors may contain backdoors enabling surveillance by the Chinese government as part of a Chinese government policy that companies are required to help the government collect information when asked to. United States Senator Mark Rubio has warned that companies like ZTE and Huawei are state directed by the Chinese government and have to be monitored and prevented from undermining and endangering United States 5G networks.
It has been argued that Huawei has strong ties with the Chinese government. The CIA has cited British sources that entities like the National Security Commission of the Communist Party of China and the people’s Liberation Army have provided funding to Huawei. During testimony to the Senate Intelligence Committees in 2018, US intelligence chiefs warned against Huawei. FBI Director Christopher A Wray stated his concern that it was very dangerous to allow foreign companies or entities to gain positions of power within the United States telecommunications networks.
United States Senator Mark Warner further warned that no major Chinese company was independent from the Chinese government and the communist party and therefore the Chinese government could be able to exploit consumer electronics such as Huawei’s smart phones to conduct surveillance. Huawei has faced various allegations of corporate espionage and intellectual property theft. In January 2019, US authorities had Huawei’s CFO and Vice chairperson Meng wan Zhouarrested on charges of theft of trade secrets.
There have always been security concerns from United States authorities in regards to Huawei; this has mostly had to do with cell towers rather than cellphones. Huawei is a main supplier of network infrastructure alongside Qualcomm and Ericson. As a hardware provider the Chinese technology giant needs to set up software in a similar manner to Apple with the IOS updates. But because there is traffic coming directly from its Huawei headquarters in China to cell towers in the United States, there is a possibility that malware could be sneaked into the network which would increase the risk of Chinese surveillance agencies using it.
Cell networks are a very easy target for espionage and the Chinese have previous history of practicing this kind of spying. Huawei has also been in violation of intellectual property laws and trade secrets. After Trump met, with the Chinese president Xi jinping at the G20 summit in Japan he was quoted as saying that the two countries would resume talks and that the United States would halt implementing new tariffs indefinitely.
There has been a lot of speculation concerning the United States and China trade deal with some pundits arguing that the US is not really interested with hurting relations with the Chinese but is looking to improve its negotiating position so as it can reach what it perceives to be fair trade deal with China. Huawei has 90 days before it starts hurting from the trade ban, it has probably stockpiled processors and can keep up production. Samsung will be the biggest beneficiary in case things go south for Huawei; they have the brand the presence and the scale to ramp up supply and distribution.
The primary concern for the US with Huawei is networking technology especially 5G and the Chinese companies handling and securing United States data overseas. The resumed negotiations could resolve the issues between the United States and Huawei. what is clear however is that Huawei is set to lose 30 billion between this year and the next if a deal is not reached. There could be far reaching consequences for China from this trade war and Huawei and other Chinese companies face uncertainty in the current situation. Restoring google services to its smart phones has to be Huawei’s top priority because most of the other options they have involve losing most of their smart phone market share.