The media has been quick to jump on the catastrophic string of events that followed US President Donald Trump’s inclusion of Chinese tech giant Huawei onto the “Entity List”.
First Google, with the looming threat of blockage of access to its vital Android and Google suite services; Intel, Qualcomm and Broadcom subsequently, that affirmed the reality of US sanctions and threatened the fate of Huawei’s promising laptop business. And then the UK-based ARM, which if it complied with US policy (spoiler alert: it does, and fully so), could seal Huawei’s fate, but nevertheless serves to demonstrate the long American arm of the “law”.
That’s bad enough, but recent news of Panasonic Corp. joining the fray thickens the plot, while fellow Japanese manufacturer Toshiba has suspended shipments pending compliance reviews.
Pro-Huawei apologists would be quick to cite rumours that Huawei’s Android (and even Windows) operating system (OS) alternatives could be launched as early as this year. But outside of the US, that’s unlikely to succeed.
Manufacturing-wise, global sanctions by the likes of ARM and other production equipment manufacturers would likely strand Huawei’s future attempts at creating future handsets. Huawei CEO and founder Zhang Renfei claims the company has contingency plans in place, but it might all boil down to a high-stakes game of bluff.
Why Huawei Users Shouldn’t Panic
This had best be qualified: nothing is certain, and everything is speculation. The United States and the corporations involved might be simply using sanctions against China’s most internationally-prominent company as leverage for their own agenda against the country’s unfair trading practices. They might also be out for blood, to slaughter China’s poster-child for posterity.
Whatever the case, Huawei’s actions, too, will be unpredictable but yet matter significantly for the cost-benefit analysis every Huawei user should be making right now. They could lobby the Chinese government to relent and enact pro-American trade policies, and everything might return back to normal, or they could stick to a prideful, obstinate rhetoric, a la Zhang Renfei, and risk escalation.
In Singapore and all over the world, Huawei handsets have plummeted in value. The Huawei P30 Pro, which retails for SGD 1,398, now commands a resell price of S$500 and under.
Two options thus remain: bite the bullet and lose close to a thousand dollars by reselling, or hang on to the device should it be worth more than S$500.
It seems rather inevitable that Huawei’s business outside of China is doomed, and there is little other reason to believe otherwise given the present trajectory. The real burning question for most would be: what happens to existing Huawei devices?
I postulate two main theories, both predicated on the continued sanctions from US and her corporate allies.
First, Huawei might be able to negotiate the continued use of Android OS on their existing phones in the hands of customers. This is unclear, as the terms of the sanctions have not been made public yet.
Second, should Huawei be unable to use that version of Android on their phones, the rumoured alternative, Huawei’s mobile OS will be likely based on Android open source platform (AOSP) that does not require any licenses and thus would likely be unaffected by any US governmental stance or policy.
In either case, it is highly likely that Huawei’s phones in the hands of consumers will remain usable to some degree. However, Google’s services like Gmail, Google Drive, along with US-based apps and social media platforms might not work.
The Windows Phone, Samsung’s Tizen operating system, and Amazon’s mobile operating system all lack access to key Google-made platforms – despite all of them being some of the largest companies in the world. I wouldn’t expect any different for Huawei and their alleged upcoming operating system, second biggest smartphone manufacturer or not.
Back to the question: if all you could do on the phone was take (really excellent) photos and videos, play (some) games, make calls and send and receive messages, would it still be worth S$500?
Why Everyone Else Should (Panic)
Most obvious would be the issue of retaliation by Chinese corporations, the government, and the people. This might be in the form of retaliatory trade policies enacting tit-for-tat sanctions on US corporations, or socially-motivated boycott movements – apparently already enacted against the US-based Apple and their iPhones.
Huawei’s US ban, unlike that experienced ZTE, is really the product of more than “security” issues. Huawei has long been a thorn in the US’s side, with their flouting of Iran sanctions posing a threat to international security; multitudinous allegations of intellectual property theft and espionage essentially transforming Huawei to Public Enemy No. 1.
With Huawei and the Chinese government viewed by most Americans to be one and the same, it is overwhelmingly likely that the furore of US trade deficits will be unleashed on the telecommunications giant.
If that is the case, and there is no reprieve for Huawei, the only possible outcome is trade war. Reports of potential rare earth metal bans from China would do nothing but wreck havoc on smartphone manufacture, especially many handsets are produced in China itself.
Owners of Chinese-based smartphone manufacturers should also bear in mind the precedent that this episode has set – that it is possible for companies both in and out of the United States to comply with executive orders not based on publicly available truths.
For everyone else, this will inevitably lead to rising costs, lower supply quantities, or maybe a return to the Stone Age.