Huawei's $105 Billion Business at Risk After Effective U.S. Ban

Cheryl Sanders
May 18, 2019

Although it does not name Huawei, it is widely considered to be aimed at the firm following repeated warnings by U.S. officials that it could be used by the Chinese state to spy on or sabotage foreign networks.

Tensions escalated on Wednesday after U.S. President Donald Trump signed an executive order barring American companies from using telecommunications equipment made by firms deemed to pose a national security risk.

The President's executive order gives the federal government the power to bar American companies from doing business with foreign suppliers that could pose a threat to national security such as the Chinese firm Huawei. Then, the U.S. Commerce Department formally added Huawei and numerous Huawei partners to the Entity List, so that it will be covered by the executive order. USA companies looking to sell to companies on the Entity List are required to get approval by the US government.

"China will take all the necessary measures to resolutely safeguard the legitimate rights of Chinese firms".

The Trump administration's decision to sanction and potentially cripple Chinese telecoms giant Huawei Technologies Co Ltd garnered a sharp rebuke on Thursday from Beijing, which warned that the move could damage trade talks.

Out of $70 billion Huawei spent for component procurement in 2018, some $11 billion went to USA firms including Qualcomm, Intel Corp and Micron Technology Inc, and they could see that revenue disappear.


"We urge the United States to cancel the wrong practices as early as possible, avoiding greater losses to Chinese and American companies and consumers, and causing a "recession-like" impact on the world economy". -China trade war. The company has always been seen as an espionage threat to the USA due to its alleged connection with the Chinese government and the oversized influence it has in the deployment of 5G networks around the world. Even software suppliers like Google would have to apply for explicitCommerce Departmentpermission to update Huawei's smartphone operating systems, which run on Google Android.

According to Purdy, the USA government has ignored Huawei's requests to understand specific cybersecurity investigations - for years.

At the same time, Beijing formally arrested two Canadians who have been detained for months on national security grounds, a move widely seen as retaliation for Ottawa's arrest of a Huawei executive past year at Washington's behest.

Details of her unwillingness to follow suit came after Mr Trump effectively blocked Huawei products from the US. Since American companies dominate semiconductors, that could smother Huawei's production of everything from 5G base stations to mobile phones.

Huawei hit back by promising to "fight to the end" of the ongoing trade war.

China is also angry about Canada's arrest of Huawei Chief Financial Officer Meng Wanzhou in December.


Huawei has been "involved in activities contrary to the national security or foreign policy interests of the United States", the order says. In other words, many believe that the Chinese government could compel Huawei to use its products to spy on the West.

It would disrupt Huawei's business at a minimum and all but put it out of business in an extreme, while its US suppliers would also be hit, they said.

In a paper last month, they said the company is owned by a shadowy trade union, noting that in China such unions are invariably government-controlled.

But Huawei believes that the USA measures will not necessarily make the United States stronger or safer, it will just limit its options leading it to seek more expensive alternatives to build its 5G network, which will in turn make it less competitive harming the interests of U.S. companies and consumers.

As negotiations towards resolving the U.S.


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