[Update 4: Over 130 License Requests] Huawei will be allowed to buy from US suppliers again
The latest development in the Huawei trade ban saga comes directly from the ongoing G20 summit wherein US President Donald Trump announced that “U.S. companies can sell their equipment to Huawei.” This is a major reprieve to Huawei, which was suffering from the political tensions between the USA and China.
“U.S. companies can sell their equipment to Huawei. We’re talking about equipment where there’s no great national security problem with it. I said that’s O.K., that we will keep selling that product, these are American companies that make these products. That’s very complex, by the way. I’ve agreed to allow them to continue to sell that product so that American companies will continue.”
Donald Trump, President of the USA, and Xi Jinping, President of China, agreed to a cease-fire in the trade battle between the two countries. As negotiations are expected to resume on this political topic, Mr. Trump says he will grant Huawei some relief by allowing US-based companies to resume sales. The US administration is now expected to hold meetings on how to deal with Huawei and its presence on the “entity list,” as the relief does not explicitly remove Huawei from the said list. The announcement made during the summit does not go into any particular details with the scope of relief, so further details are awaited on this end.
Nonetheless, this announcement comes as a major relief for all stakeholders. After the first announcement of the executive order, US-based companies like Google, Qualcomm, and many others had suspended business with Huawei, only to resume it in a limited form after the Chinese company was granted a “temporary general license.” Even UK-based company ARM was affected by the trade restrictions. Because of the uncertainty around Huawei and its smartphones, the company was expecting its international smartphone sales to drop by as much as 40-60%. Devices like the Honor 20 Pro were one of the first victims of the trade ban, as the availability of the phone was no longer certain. Now, with this relief in hand, we expect companies to resume their business operations with Huawei and Honor.
This article was updated at 3:25 PM ET to reflect that ARM is based in the UK.
Update 1: Only Widely Available Goods
Per Reuters, Larry Kudlow, the National Economic Council chairman, told Fox News Sunday that President Donald Trump’s decision to allow sales of U.S. technology supplies to Huawei only applies to products that are readily available around the world.
“All that is going to happen is Commerce will grant some additional licenses where there is a general availability…[U.S. microfirm chips in particular] are selling products that are widely available from other countries…This [is] not a general amnestry…The national security concerns remain paramount.” – Larry Kudlow, chairman of the National Economic Council
The details of this agreement are still vague and not final, so we’ll have to wait and see exactly what firms will no longer be restricted from selling products to Huawei. Two Senate Republicans, Marco Rubio and Lindsay Graham, are worried about this latest concession to Huawei, with the former proposing legislation to keep the restrictions in place and the latter warning of “a lot of pushback.” Democrat Chuck Schumer also expressed his disapproval with the trade talks. With bipartisan support for keeping American companies away from doing business with Huawei, it seems that the Chinese giant’s struggles are not over yet.
Update 2: US Government Staff told to treat Huawei as blacklisted only
As per another Reuters report, the US government staff has been told to treat Huawei as blacklisted, effectively nullifying the President’s word.
Mr. John Sonderman, Deputy Director of the Office of Export Enforcement within the Commerce Department’s Bureau of Industry and Security (BIS), sent an email to the enforcement staff clarifying how agents should approach license requests by firms seeking approval to sell to Huawei. According to the email, all such applications should be considered on merit and flagged with language noting that “This party is on the Entity List. Evaluate the associated license review policy under part 744”, citing regulations that include the Entity List and the “presumption of denial” licensing policy that is applied to blacklisted companies.
A presumption of denial implies strict review and most licenses reviewed under it are not approved. The email is the only guidance that enforcement officials have received after Trump’s announcement, and it does not improve Huawei’s practical position.
Update 3: US Government holds off on Huawei license decision
The US Government is holding off on deciding on the licenses to be issued to US companies to resume their business with Huawei. The Department of Commerce has received 50 requests from US companies for the special license that they need in order to supply goods to Huawei, but the government is unwilling to decide just yet as China has retaliated with a decision to not purchase US farming goods. The government maintains that the promise to allow reprieve to Huawei was contingent on China beefing up its purchases from American farmers. And as that has not happened, there was no reprieve. The trade war between USA and China does not appear to be de-escalating as the countries are acting and reacting to each other in politically inclined ways that go beyond the scope of our coverage as a technology portal.
In connected news, Huawei also announced its own first-party operating system called Harmony OS. The company still maintains that Harmony OS is not intended to compete against Android, and that Android remains the first choice for Huawei and Honor smartphones and tablets. Harmony OS is intended to be a “Plan B”, which will be used if and only if Plan Android is no longer realizable. The upcoming Huawei Mate 30 series has not received its Google Play Services certification yet because of the trade ban; so unless the trade ban situation is rectified, we might just see Huawei being forced to use the alternative.
Update 4: Over 130 License Requests
Reuters is reporting that the US Commerce Department received over 130 application from companies for licenses to sell to Huawei. This is after the department postponed the trade ban for another 90 days. In July, US Commerce Secretary Wilbur Ross disclosed receiving only around 50 applications. No licenses have been granted yet as the Commerce Department is unclear on what to do. “Nobody in the executive branch knows what (Trump) wants and they’re all afraid to make a decision without knowing that,” said William Reinsch, a former Commerce Department official.
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