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U.S. Ridding Itself of Chip on Shoulder Against Huawei?

U.S. Ridding Itself of Chip on Shoulder Against Huawei?

On Friday, June 21, amid heightening tensions between the tech-warring United States and China, Huawei unveiled its long-awaited Nova 5 series. The series consists of three variants of the phone. The lower-end product of the line, the Nova 5i, contains the Kirin 710 chipset. The Nova 5 Pro stands at the top-end range of the series and is powered by the Kirin 980 processor, the same chipset that powers Huawei’s flagship P30 series and Mate 20. The real standout of the series has been the Kirin 810 chipset of the Nova 5, which represents Huawei’s newest mid-range processor and the company’s second 7nm chipset. Interestingly, the Nova 5 and Nova 5 Pro are almost identical in specifications, with the onboard chipset serving as the sole differentiating feature. Both boast a sleek colorful, exterior complete with a 6.39-inch OLED display, optical in-screen fingerprint scanners, a 16-megapixel super wide lens, and a 2-megapixel sensor and macro lens. 

Even if Americans wish to purchase from Huawei to judge whether the buzz surrounding Chinese smartphones is justified, they are out of luck. This past week, a UK writer at PC Magazine attempted to ship a Huawei P30 from the U.K. office to the New York office but found that FedEx refused to ship the item because of a “U.S. government issue” with the Chinese government and Huawei. UPS maintains that specific policy does not prohibit shipping a Huawei device from the U.K. to the U.S; rather, it does not sanction shipping Huawei products to 69 locations outside the U.S. that are listed in the May 21 issue of the Federal Register. Teri Daley, a spokeswoman for Huawei, tweeted that “this is a complete misinterpretation of the EO/EL.”  It appears that FedEx has taken enforcement of the ban into its own hands, acting outside of the mandates written in the executive order.


If not for the Trump administration’s ban on China’s largest telecommunications firm, Huawei would feasibly be the world’s leading global seller of premium smartphones. In fact, throughout China, the telecom systems manufacturer has surpassed Apple in the premium phone category and, based on its first-quarter sales data, is set to outpace  its American counterpart in China, Central and Eastern Europe, and Latin America. In the Middle East and Western Europe, Huawei is closely trailing Samsung, which is powered by Google’s Android operating system. Washington’s blacklisting of China’s third major company stymies the nation’s rollout of its 5G mobile network and thwarts efforts to broaden its digital influence internationally. The Trump administration tenaciously defends the Huawei ban, rationalizing that the company poses a significant national security threat since its hardware puts the U.S. at risk for espionage. Others speculate that the ban of Huawei is part and parcel of the intensifying trade war between the United States and China. For over a year, Trump has imposed a series of escalating tariffs on Chinese imports, aiming to force leaders to negotiate. Nonetheless, as expected, China has retaliated against Washington’s measures with its own set of tariffs, further inciting diplomatic tensions.

As European nations face mounting pressure from Washington to sever all ties with Huawei, these countries must decide whether to ban, limit, or allow the Chinese company to grow its 5G infrastructure. Previously, Huawei had made deep customer relationships with Britain, France, Italy, and Germany, since the company’s products underbid one of its major European rivals, Ericsson, by 60 percent. Hundreds of millions of dollars in subsidies from the Chinese government have allowed Huawei to provide high-quality technologies at discounted prices. Although Huawei products have not been entirely banned in many European nations, tightening regulations will bode well for Nokia and Ericsson, allowing these competitors to swiftly recapture lost market share. It seems as if Washington’s influence over other nations is winning out, however, since Huawei’s overseas smartphone sales fell 40% since the middle of May. Exclusion from the European market threatens Huawei’s position as a telecom titan, due to the fact that Europe is the principal space where Huawei succeeds in selling its high-end phones. In fact, Huawei sold an estimated 23.6 million smartphones in Western Europe in 2018.

Regardless, Huawei claims that it has been preparing for a U.S. ban since 2018, taking measures to stockpile chips and necessary components. While the supply is speculated to last for months to come, when it runs dry, the outlook for the company does not appear promising, especially since the Chinese domestic semiconductor industry is too young to replace foreign chip production. The emergence of new technologies, such as AI, has driven semiconductor manufacturing towards increased specialization. Over the past 30 years, the semiconductor industry “has become deeply globalized…and untangling that interconnected web risks slowing innovation and technological advancement in the long term” (Stratfor Analysis, 2019). Thus, the blacklisting of Huawei disturbs the global tech/digital economy supply chain.

Initially, Infineon Technologies AG, one of Europe’s largest chipmakers, stated that it would continue to supply the blacklisted Huawei with chips. However, following the U.S. Department of Commerce’s decision to place the telecom company on the aforementioned “Entity List,” Infineon has halted deliveries of Huawei products originating in the United States. Qualcomm Inc., Xilinx Inc., and Broadcom Inc. have all broken their ties with the banned company. By the same token, major chip designer ARM has split from Huawei amidst the escalating controversies. Huawei’s subsidiary, HiSilicon, has made ARM-based chip systems since 2012. Without ARM, Huawei’s alleged backup plan to begin domestic chip production is not feasible. Chips would need to be completely redesigned, a process that takes years.

Further, Google’s ban of Huawei software excludes the Chinese firm from one of the world’s top operating systems. Huawei contends that it has been working on its own “Plan B” operating system since the U.S.-ZTE debacle in 2012. It is rumored that the Android alternative would be coined “HongMeng OS” in China and “Oak OS” in other markets. According to Huawei’s founder, Ren Zhengfei, the company is able to face any challenge that is thrown its away…even an expected decline in company revenue by $30 billion over the next two years. This substantial plunge stands in stark contrast to the Chinese tech giant’s 2018 trend of growing revenue by 20%. In fact, in Q1-2019, Huawei surpassed Apple in the race to become the second-largest smartphone manufacturer, with Samsung Electronics Co. still in the lead.  

Although Ren seems confident in Huawei’s ability to rebound in the wake of Washington’s regulatory blitz, the ban has disrupted China’s rollout of 5G gear and development of key network infrastructure. The executive order has targeted the heart of China’s platform for technological expansion, and “in the global tech world, the looming question is just how far the United States (and China) will go to try to separate a deeply globalized sector that boasts long, complicated supply chains” (Bey, 2019). The Trump administration’s policies have entirely destabilized the U.S.’ commercial and political relationship with China and have upset the global supply chain for digital technologies.

Surprisingly, after the meeting between Chinese President Xi Jinping and President Trump at the recent G20 summit in Tokyo, Trump has made concessions to Huawei. Although he does not plan to lift the ban that forbids the Chinese manufacturer from selling its products, he will allow American companies to continue to sell hardware components to Huawei. Fortunately for Huawei, its component supply will not be blocked, allowing for further 5G deployment. Perhaps Trump has slightly shrugged the anti-Huawei chip off his shoulder as a bargaining tool for future trade talks with Beijing. While the future of negotiations between the U.S. and China is still uncertain, Trump’s Huawei reprieve temporarily keeps relations from overheating.



Works Cited

As the U.S.-China Tech War Rages on, the Electronics Industry Braces for Impact. (2019). 

Stratfor Analysis, N.PAG. Retrieved from

Bey, M. (2019). New Huawei Restrictions Turn Up the Heat on the U.S-China Tech Cold War. 

Stratfor Geopolitical Diary, N.PAG. Retrieved from

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