The trade war between China and the United States has put the Asian company Huawei in check. The measures taken by Donald Trump to stop the Chinese giant’s rapid advance seem to be working and the popular mobile phone manufacturer has gone from competing side by side with Apple and Samsung to suffer significant losses, both economic and prestige.
The origin of the conflict
Oon December 1, 2018, Huawei’s financial director, Wanzhou Meng, was arrested by Canadian authorities to be extradited to the U.S. for allegedly violating sanctions imposed by Washington against Iran. This triggered tensions between the two countries. Huawei, a global threat, soon was accused by the U.S. of espionage. Its intelligence services claimed that Huawei’s technology could function as a Trojan horse in Western countries, a system with which the Chinese government could obtain confidential data that would endanger security.
Donald Trump’s veto
On May 16, the U.S. president declared a national emergency to prohibit U.S. companies from using telecommunications equipment manufactured by companies allegedly attempting to spy on the United States. The president expressed his decision in an executive order, which is directed against the “foreign adversaries” of the U.S., but does not specifically name China. In a later decision, the Commerce Department included Huawei on a list of companies and individuals prohibited from accessing U.S. technology.
Google breaks with Huawei
On May 19, the U.S. giant suspends business with Huawei and announces that it will stop updating its Android operating system to Huawei’s phone customers. In addition, this meant that future Huawei mobiles may not include applications and services such as Gmail, Google Maps or the Play Store. Shortly thereafter, major chip manufacturers, including Intel, Qualcomm, Xilinx and Broadcom, also cut off supply to Huawei.
The drop in sales
The uncertainty and fear that this situation generated in consumers had a significant impact on sales.
The truth is that the latest data does not show that recovery. The collapse has benefited their competition. Both Samsung and Xiaomi have seen their sales increase in recent weeks by around 50%, a very high figure in the case of the South Korean company. In addition to selling less, the products Huawei now sells have lost value. In addition to the large discounts they have had to make (up to 40%) in order not to suffer a catastrophic fall in sales, the fact must be added that the fall has been asymmetrical: although they still sell quite a few cheap mobiles, fewer and fewer customers are daring to buy a top-of-the-range device from a company that weighs so much uncertainty.
The false truce
On 29 June, the conflict seemed to be over. “We have agreed that American companies can sell products to Huawei,” Trump said after spending nearly an hour and a half with Xi Jinping at the G20 meeting in Osaka, Japan. However, the White House said Tuesday that the Chinese firm Huawei will still not be able to commercialize 5G technology (the last big technological battle horse) in the U.S., although it will be able to sell small components to U.S. companies: “chips, which are small technological components and have no impact on national security. The Department of Commerce continues in that line by order of the federal agency, which has confirmed that Huawei is still blacklisted. According to Reuters, officials have received an e-mail explaining how to proceed with companies asking for permission to sell products from the Chinese multinational, which means that the Chinese company is still in a very difficult situation.