Tag: Huawei

US may be the one hurt by Huawei sanctions

By Frank Bajak And Michael Liedtke for Phys.Org

Trump administration sanctions against Huawei have begun to bite even though their dimensions remain unclear. U.S. companies that supply the Chinese tech powerhouse with computer chips face a drop in sales, and Huawei’s smartphone sales could get decimated with the anticipated loss of Google’s popular software and services.

The U.S. move escalates trade-war tensions with Beijing, but also risks making China more self-sufficient over time.

Here’s a look at what’s behind the dispute and what it means.

What’s this about?

The U.S. Commerce Department placed Huawei on its so-called Entity List , effectively barring U.S. firms from selling it technology without government approval.

Google said it would continue to support existing Huawei smartphones but future devices won’t have its flagship apps and services, including maps, Gmail and search. Only basic services would be available, making Huawei phones less desirable. Separately, Huawei is the world’s leading provider of networking equipment, but it relies on U.S. components including computer chips. About a third of Huawei’s suppliers are American.

Why punish Huawei?

The U.S. defense and intelligence communities have long accused Huawei of being an untrustworthy agent of Beijing’s repressive rulers—though without providing evidence. The U.S. government’s sanctions are widely seen as a means of pressuring reluctant allies in Europe to exclude Huawei equipment from their next-generation wireless networks. Washington says it’s a question of national security and punishment of Huawei for skirting sanctions against Iran, but the backdrop is a struggle for economic and technological dominance.

A Huawei Mate20P smartphone model showing its own Kirin chip processor is displayed at an electronic store in Beijing, Monday, May 20, 2019. Google assured users of Huawei smartphones on Monday the American company’s basic services will work on them following U.S. government cubs on doing business with the Chinese tech giant. The announcement highlighted the potential impact on global consumers and technology industries of the Trump administration’s decision to tighten controls on Huawei Technologies Ltd., which Washington says is a security threat.
The politics of President Donald Trump’s escalating tit-for-tat trade war have co-opted a longstanding policy goal of stemming state-backed Chinese cyber theft of trade and military secrets. Commerce Secretary Wilbur Ross said last week that the sanctions on Huawei have nothing to do with the trade war and could be revoked if Huawei’s behavior were to change.

The effect of the sanctions

Analysts predict consumers will abandon Huawei for other smartphone makers if Huawei can only use a stripped-down version of Android. Huawei, now the No. 2 smartphone supplier, could fall behind Apple to third place. Google could seek exemptions, but would not comment on whether it planned to do so.

Who uses Huawei?

While most consumers in the U.S. don’t even know how to pronounce Huawei (it’s “HWA-way”), its brand is well known in most of the rest of the world, where people have been buying its smartphones in droves.

Huawei stealthily became an industry star by plowing into new markets, developing a lineup of phones that offer affordable options for low-income households and luxury models that are siphoning upper-crust sales from Apple and Samsung in China and Europe. About 13% of its phones are now sold in Europe, Gartner analyst Annette Zimmermann estimates.

That formula helped Huawei establish itself as the world’s second-largest seller of smartphones during the first three months of this year, according to the research firm IDC. Huawei shipped 59 million smartphones in the January-March period, nearly 23 million more than Apple.

Ripple effects

The sanctions could have unwelcome ripple effects in the U.S., given how much technology Huawei buys from U.S. companies, especially from makers of the microprocessors that go into smartphones, computers, internet networking gear and other gadgetry.

The list of chip companies expected to be hit hardest includes Micron Technologies, Qualcomm, Qorvo and Skyworks Solutions, which all have listed Huawei as a major customer. Others likely to suffer are Xilinx, Broadcom and Texas Instruments, according to industry analysts.

Being cut off from Huawei will also compound the pain the chip sector is already experiencing from the Trump administration’s rising China tariffs.

As expected, the Commerce Department on Monday announced a grace period of 90 days that applies to existing Huawei smartphones and networking equipment. The grace period allows U.S. providers to alert Huawei to security vulnerabilities and engage the Chinese company in research on standards for next-generation 5G wireless networks. It also gives operators of U.S. rural broadband networks that use Huawei routers time to switch them out.

The Commerce Department could extend the temporary license to continue to ease the blow on smartphone owners and network operators with installed Huawei gear. Whether that happens could depend on whether countries including France, Germany, the U.K. and the Netherlands continue to refuse to completely exclude Huawei equipment from their wireless networks.

Still in place are requirements that government licenses be obtained for any U.S. sales to Huawei unrelated to existing equipment.

Could this backfire?

Huawei is already the biggest global supplier of networking equipment and is now likely to move toward making all components domestically. China already has a policy seeking technological independence by 2025.

A man checks smartphones near a section promoting Huawei new P30 smartphone at an electronic store in Beijing, Monday, May 20, 2019. Google assured users of Huawei smartphones on Monday the American company’s basic services will work on them following U.S. government cubs on doing business with the Chinese tech giant. The announcement highlighted the potential impact on global consumers and technology industries of the Trump administration’s decision to tighten controls on Huawei Technologies Ltd., which Washington says is a security threat. (AP Photo/Andy Wong)
U.S. tech companies, facing a drop in sales, could respond with layoffs. More than 52,000 technology jobs in the U.S. are directly tied to China exports, according to the Computing Technology Industry Association, a trade group also known as CompTIA.

Will Google suffer?

Google may lose some licensing fees and opportunities to show ads on Huawei phones, but it still will probably be a financial hiccup for Google and its corporate parent, Alphabet Inc., which is expected to generate $160 billion in revenue this year.

The Apple effect

In theory, Huawei’s losses could translate into gains for both Samsung and Apple at a time both of those companies are trying to reverse a sharp decline in smartphone sales.

But Apple also stands to be hurt if China decides to target it in retaliation. Apple is particularly vulnerable because most iPhones are assembled in China. The Chinese government, for example could block crucial shipments to the factories assembling iPhones or take other measures that disrupt the supply chain.

Any retaliatory move from China could come on top of a looming increase on tariffs by the U.S. that would hit the iPhone, forcing Apple to raise prices or reduce profits.

What’s more, the escalating trade war may trigger a backlash among Chinese consumers against U.S. products, including the iPhone.

“Beijing could stoke nationalist sentiment over the treatment of Huawei, which could result in protests against major U.S. technology brands,” CompTIA warned.

 

 

What is going on between Huawei and Google?

By Tom Wiggins for Stuff

You might have read that Google and Huawei have had a bit of a tiff this week.

You can’t really pin the blame on either of them. Donald Trump issued an executive order that meant US-based companies were restricted from doing business with Huawei unless they had a special licence, so Google had to limit the access Huawei phones had to its services.

That’s since been relaxed, but only for 90 days, so things could get ugly again before long. But what does it mean for your new P30 Pro? And does it put an end to your plans to pick up a foldable Mate X?

What is the problem?
America’s leader seems to have decided he doesn’t like Huawei because it’s from a country he has described as a “foreign adversary”.

Whether Trump’s reservations have any basis in reality or not, if the ban is upheld it means that American companies will not be allowed to trade with Huawei and it wouldn’t be able to base its OS on full-fat Android anymore. As the second-biggest manufacturer of smartphones in the world that could cause Huawei a significant headache.

What if you own a Huawei phone?
Huawei phones that have already been released have been certified to access the Play Store and receive updates for the current version of Android, so chances are things will carry on as normal whatever happens further down the line. That goes for Honor phones too.

If the US upholds its actions, though, future versions of the OS wouldn’t be certified for Huawei phones, meaning functionality would be severely restricted, and security updates could take a lot longer to come through.

What will Huawei use if not Android?
Android is open source, so Huawei will still be able to use the barebones of it no matter what, but it would mean apps such as Gmail, YouTube, Drive and Maps wouldn’t be pre-installed, and without access to the Play Store they wouldn’t be available for download later either. Some can be accessed through the phone’s web browser but that’s not the same and consumers would likely look elsewhere.

As a result, Huawei might opt to ditch Android altogether, but it’s already working on an alternative operating system of its own. That would require new versions of existing apps, although considering many use Android APIs to power things like notifications, without cooperation from Google significant changes would be needed even if Huawei were to stick with it.

Are others banning Huawei?
The ban has already starting to have a wider impact. EE has decided to leave Huawei’s Mate 20 X 5G handset out of its 5G launch line-up until it can be sure that it would be fully supported, while Vodafone has cancelled an event based around its own 5G rollout, although pricing and pre-order information will still be announced. Chip designer ARM, which most mobile processor manufacturers rely on, has also suspended its dealings with Huawei.

Rain and Huawei roll out high-speed 5G in SA

By Siseko Njobeni for Business Live

SA’s data-only network operator Rain, which is partly owned by businessmen Patrice Motsepe, Paul Harris and Michael Jordaan, has partnered with Chinese telecoms giant Huawei to roll out the high-speed 5G network by the middle of 2019.

The roll-out will make SA one of the first countries to launch 5G, which promises faster download speeds, reliable network connectivity and the ability to connect more devices at once.

“The network will provide fibre-like speeds without installation complexities, time delays and cost of laying fibre in underserviced areas,” Rain CEO Willem Roos said on Tuesday.

Rain and Huawei made the announcement at the 2019 Mobile World Congress in Barcelona, Spain, where 5G took centre stage.

“5G is here. If there is any doubt, you only have to walk around [the conference],” said Harris, who is also Rain chair.

He said that the development of 5G products later in the year would hit the industry like a tsunami.

Roos said Rain would take advantage of its existing 4G network and allocated spectrum.

Huawei said its products would enable Rain to use the existing network, saying leveraging existing infrastructure would accelerate the roll-out of the 5G network. Rain had about 3,000 4G sites in SA, Roos said.

“It is well-known that as broadband penetration increases in a country, you get better economic growth. With better economic growth, you can see improvement in employment. We are big supporters of [President Cyril Ramaphosa’s plan] to re-energise investment in SA.

“We made a promise to invest a significant amount of money in 5G,” Roos said.

“We hope to have rolled out a significant number of towers in [Cape Town, Johannesburg and Durban] by mid-2019 to offer commercial services to clients.”

Rain planned to roll out the network rapidly, aiming for “significant” coverage in metropolitan areas initially, he said. The company said it wanted to deploy 1,000 5G sites in major cities in the next two years.

Responding to a question during the announcement, Roos said Rain had no immediate plans to expand to the rest of Africa. “Obviously, there is complexity around spectrum, licences and those kinds of issues. Certainly, SA can play a crucial role as the gateway to Africa. We will see if commercial opportunities that make sense arise.”

GSMA director-general Mats Granryd said: “The arrival of 5G forms a major part of the world’s move towards an era of intelligent connectivity, which alongside developments in the Internet of Things, big data and artificial intelligence, is poised to be a key driver of economic growth over the coming years.”

GSMA is a global mobile industry body.

It said in a report that 5G would account for 15% of global mobile connections by 2025.

By Abrar Al-Heeti for C-NET

The US Department of Justice on Monday charged Huawei with theft of trade secrets, wire fraud and obstruction of justice.

A 10-count indictment alleges that China’s Huawei stole trade secrets from US carrier T-Mobile beginning in 2012. Huawei also allegedly offered bonuses to employees who stole confidential information from companies. In addition, a 13-count indictment charged four defendants, including Huawei and Chief Financial Officer Meng Wanzhou, with financial fraud. The indicted defendants also include affiliates Huawei USA and Skycom.

“The charges unsealed today clearly allege that Huawei intentionally conspired to steal the intellectual property of an American company in an attempt to undermine the free and fair global marketplace,” said FBI Director Christopher Wray in a statement. “To the detriment of American ingenuity, Huawei continually disregarded the laws of the United States in the hopes of gaining an unfair economic advantage.”

The charges come amid heightened scrutiny for Huawei, the world’s largest supplier of telecom equipment and the No. 2 smartphone maker behind Samsung. The US has already banned Huawei from selling networking equipment here, but a number of other countries have either already ceased working with the company, or are considering a ban. The Chinese government and Huawei have said the moves could have ramifications since the company contributes to industry-standard wireless technologies like 5G.

Both the US and China are jockeying for leadership in the next-generation of cellular technology, which promises higher speeds and the ability to handle more connected devices. US officials have offered warnings about Huawei and its ties to China.

“There is ample evidence to suggest that no major Chinese company is independent of the Chinese government and Communist Party — and Huawei, which China’s government and military tout as a ‘national champion,’ is no exception,” said Sen. Mark Warner, a Virginia Democrat who’s vice chairman of the Senate Select Committee on Intelligence.

Huawei, meanwhile, denied any wrongdoing.

“Huawei is disappointed to learn of the charges brought against the company today,” the company said in an emailed statement.

“After Meng’s arrest, the company sought an opportunity to discuss the Eastern District of New York investigation with the Justice Department, but the request was rejected without explanation,” Huawei continued. “The allegations in the Western District of Washington trade secret indictment were already the subject of a civil suit that was settled by the parties after a Seattle jury found neither damages nor willful and malicious conduct on the trade secret claim.”

T-Mobile declined to comment.

Two charges
According the first set of indictments, Huawei began stealing information about a phone-testing robot from T-Mobile called Tappy. Huawei engineers allegedly violated confidentiality and nondisclosure agreements by taking pictures of Tappy, taking measurements of parts of the robot and stealing a piece of it. When T-Mobile found out and threatened to sue, Huawei falsely said the theft was done by rogue actors within the company, according to the indictment.

T-Mobile sued anyway, and in 2017 won its case against Huawei, with a jury awarding it $4.8 million.

Despite Huawei’s insistence that the action was a one-off affair, the Justice Department says emails obtained during the investigation found that the theft of secrets from T-Mobile was a companywide effort.

It has been clear for some time that Huawei poses a threat to our national security.
Sen. Mark Warner
Huawei could face a fine of up to either $5 million or three times the value of the stolen trade secret, for conspiracy and attempt to steal trade secrets. The company could also face a fine of up to $500,000 for wire fraud and obstruction of justice.

In the second set of indictments, Meng was charged with bank fraud, wire fraud and conspiracies to commit bank and wire fraud. Huawei and Huawei USA are charged with conspiracy to obstruct justice. Huawei and Skycom are charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, violating the International Emergency Economic Powers Act and conspiracy to violate IEEPA, and conspiracy to commit money laundering.

The charges are related to the company’s alleged efforts to evade US sanctions and do business with Iran. Last month, Meng was detained in Canada at the behest of the Justice Department over those claims. While in a Vancouver courthouse to discuss her bail, a lawyer with Canada’s Justice Department alleged she defrauded US banks into making transactions that violated those sanctions, according to Bloomberg.

The founder’s daughter
Notably, Meng isn’t just the CFO of Huawei. She’s the daughter of the founder and president, Zhengfei Ren. And her arrest doesn’t just have ripple effects across the tech industry; it threatens to blow up an already precarious relationship between the US and China over trade talks.

Beyond trade, others see Huawei as a national security issue.

“It has been clear for some time that Huawei poses a threat to our national security, and I applaud the Trump Administration for taking steps to finally hold the company accountable,” Warner said.

Huawei has consistently denied any wrongdoing by Meng. At the World Economic Forum at Davos, Huawei Chairman Liang Hua called for a quick resolution of the case and the release of Meng, according to Reuters.

Meng’s lawyer, Reid Weingarten, told Reuters on Tuesday that she was a victim of “complex” China-US relations.

“Our client, Sabrina Meng, should not be a pawn or a hostage in this relationship.” he said, using one of her Western names. “Ms. Meng is an ethical and honorable businesswoman who has never spent a second of her life plotting to violate any US law, including the Iranian sanctions.”

Huawei also told Reuters that it had sought to discuss the charges with US authorities, “but the request was rejected without explanation.”

Over the past few months, Huawei has endured a wave of negative sentiment. UK carrier BT said it’d pull Huawei equipment out of its 4G network and ban it from any future 5G deployments. Japan reportedly banned government purchases from Huawei. Also last month, Andrus Ansip, the EU’s technology chief, warned that Huawei and other Chinese companies pose a risk to the bloc’s industry and security, according to Reuters.

All of the negativity could have a trickle-down effect on the company.

“[The case] puts every aspect of Huawei’s business in jeopardy in the US and EU, including consumer sales,” said Maribel Lopez, an analyst at Lopez Research. “Instead of being known for innovation, the company is positioned as criminal.”

By Samuel Gibbs for The Guardian

Huawei overtook Apple to become the world’s second-largest smartphone seller behind Samsung in the second quarter, the first time in seven years that any contender has managed to split the top two.

Multiple market analysts said that Huawei’s rise came as the slowdown in China, the world’s largest market for smartphones, eased, with growing market share in Europe. Huawei failed in its recent bid to launch in the US after government action against companies deemed a security threat.

Despite Apple being historically weak in the second quarter, analysts described the rise of Huawei as significant.

“The importance of Huawei overtaking Apple this quarter cannot be overstated,” said Canalys analyst Ben Stanton. “It is the first time in seven years that Samsung and Apple have not held the top two positions.”

Approximately 351m smartphones were sold globally in the second quarter, down 2% year-on-year due to market saturation, increasing prices, longer replacement rates, reduced mobile phone network subsidies and lack of feature and design innovation, according to data aggregated by the Guardian.

“Consumers remain willing to pay more for premium offerings in numerous markets and they now expect their device to outlast and outperform previous generations of that device which cost considerably less a few years ago,” Anthony Scarsella from IDC.

Samsung was worst hit by the slowdown of the big three, down 10% year-on-year selling 71.9m smartphones for a 20% share of the market. Huawei raced into the second spot selling 54.2m phones in the quarter, up 41%, for a 15% share of the market. Apple sold 41.3m iPhones, up 1%, for a 12% market share.

“The continued growth of Huawei is impressive, to say the least, as is its ability to move into markets where, until recently, the brand was largely unknown,” said Ryan Reith, programme vice president of IDC’s Worldwide Mobile Device Tracker.

Stanton said: “Huawei’s momentum will obviously concern Samsung, but it should also serve as a warning to Apple, which needs to ship volume to support its growing services division.

“If Apple and Samsung want to maintain their market positions, they must make their portfolios more competitive.’’

Tarun Pathak from Counterpoint Research said that Huawei’s two-pronged strategy using its fast-growing Honor sub-brand to capture the mid-tier segment below £500 and its premium Huawei-branded smartphones at the top end, such as the P20 Pro, appeared to be working.

Analysts said that Huawei’s exclusion from the US has forced it to work harder across Asia and Europe to achieve its growth goals, with its mid-range models proving particularly popular. Data from Canalys showed that Huawei grew it market share in China by 6% to a record 27% in the quarter, where 100m smartphones were sold across the country.

Outside of China, Huawei’s increasing brand recognition newly allowing it to compete at the top end, but the Chinese market remains key for Huawei as it has come under fire from the US, Australia and other nations over concerns it could facilitate Chinese government spying.

Huawei has denied it facilitates spying and has said it is a private company not under Chinese government control and not subject to Chinese security laws overseas.

China and the US are also embroiled in a trade dispute with both nations imposing tariffs on billions of dollars worth of goods and fighting over technology and patents, which analysts said creates significant uncertainty for all of the major smartphone brands.

Huawei said Tuesday that overall it had 15% higher revenue in the first six months of 2018, steady at levels seen a year ago. Revenue rose to 325.7bn yuan (£36.52bn), while operating margin rose to 14%, from 11% a year ago.

Huawei’s consumer division, which houses its smartphones business, accounted for roughly a third of its total revenue last year. It got half its revenue from its mobile phone network.

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