Qualcomm, Huawei Cut Business Ties After US Blacklist

Huawei’s recent trade ban by the United States has prompted Google to cut off the Chinese company from using its Android operating system and all related services. Other tech giants soon followed suit, resulting in the suspension of business dealings between Qualcomm and Huawei.

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Huawei is Blacklisted by the US Government

In early 2019, US President Donald Trump signed an executive order that bans telecom equipment from foreign companies that are believed to be a security risk. Most of the companies affected by the trade ban come from China, which is suspected to be spying on the US through its telecom companies.

Shenzhen-based Huawei Technologies is the latest Chinese company to enter the “Entity” blacklist of the US Commerce Department. Shortly after the blacklist, American tech giants like Google and Microsoft have announced that they are no longer doing business with Huawei.

Qualcomm Stops Supply to Huawei

Unfortunately, the two companies are just the first to cut off Huawei. Major tech players that formerly worked with Huawei, such as Intel, Qualcomm, ARM, Vodaphone, Broadcom, and Infineon Technologies have likewise complied with the executive order.

Of these, Qualcomm is one of the most prominent suppliers taking action against Huawei. Huawei depends heavily on Qualcomm for modems and chipsets for its smartphones, as well as modems and processors for its laptop line. While Huawei claims to have stockpiled at least three months’ worth of components, Qualcomm’s departure remains a catastrophic blow to its operations.

More Repercussions of the Huawei Trade Ban

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The impact of the blacklist extends beyond Huawei. For instance, numerous telecom providers around the world are preparing for the rollout of their 5G networks. Three of China’s largest telecoms that rely on Huawei—China Unicom, China Mobile, and China Telecom—now have to delay their 5G expansion.

Even smaller US carriers are not safe from the consequences. Most will be forced to spend millions just to replace all of the equipment they’ve already installed or bought from Huawei. They may also face the need to look for new suppliers for their components.

Huawei’s Position After Qualcomm, US Boycott

While the situation may look bleak for Huawei at the moment, experts say that China is unlikely to allow Huawei to fail. Its trademark commission has already approved Huawei’s proprietary operating system called “Hongmeng.” Huawei has also begun to design its own components and chips for its laptops, phones, and networking products.

In response to the US ban, China is expected to offer massive incentives in favor of its government-backed companies and products. Given China’s position as the biggest and fastest-growing global smartphone market, US tech vendors may eventually be unable to compete in the Chinese market.

Due to its scale, Huawei may soon be an emerging global vendor with enormous government resources that could underprice all rivals with equal or better hardware.

This can eventually propel Huawei as the global telecom leader, regardless of the Qualcomm-Huawei dissolution. It’s a likely scenario, especially since the trade ban doesn’t look like it’s going to be lifted anytime soon.