In May, Trump added Huawei to the Entity List by executive order, forbidding US companies from working with Huawei without a government-issued license. The company faces allegations of violating trade sanctions with Iran, trade theft from US companies, and acting as an earpiece for the Chinese government. Huawei denies these accusations.
If Huawei is not removed from the blacklist in the coming months, this could spell serious trouble for the company’s consumer business, given its use of chips built by Intel and ARM (both of which have paused business with Huawei, despite ARM being based in the UK) and the Android OS (owned by Google). In preparation for the worst possible scenario, Huawei has been stockpiling chips, in addition to continuing the development of its own hardware via its subsidiary HiSilicon. Recently, the company also confirmed that it had been working on its own Harmony OS (‘Hongmeng’ in the Chinese market), which it said would initially be incorporated into IoT devices, with no immediate plans to introduce it on smartphones. The company would prefer to continue using Android on all its smartphones “for the time being”, it confirmed.
A temporary 90-day licence was issued by the US government earlier this year and renewed in August, allowing Huawei to maintain existing devices. Existing Huawei phones, such as the Mate 20 and P30 lines, will continue to run Google apps and services, and have already been confirmed to get the next version of Android, Android 10.
While US companies can apply for specific products to be exempt from the ban, it is not known whether Google is among the more than 130 companies to apply for a licence from the US Commerce Department to trade with Huawei. However, Google has told Reuters that, given current restrictions on trading with Huawei, yet-to-be-launched Huawei phones cannot be licensed to use Google apps and services, such as the Play Store, YouTube, Google maps, Google Photos, and Gmail.
These restrictions could also affect its use of the Android OS, although Huawei may continue to use the basic open-source version of Google.
Huawei is set to launch its flagship Mate 30 line of smartphones in Munich in September, following the release of its well-received Mate 20 line in autumn 2018. The Mate 30 is expected to support 5G and retail for close to £1,000.
A Huawei spokesperson said: “Huawei will continue to use the Android OS and ecosystem if the US government allows us to do so. Otherwise, we will continue to develop our own operating system and ecosystem.”
Analyst Richard Windsor told Reuters that: “Without Google Services, no one will buy the device.”
According to Counterpoint Research, the US blacklisting of Huawei has had a severe knock on its consumer sales in Europe, with its market share in Europe sliding from 24.9 per cent to 19.3 per cent between the first and second quarter of 2019.
While Huawei has been preparing its Harmong OS since 2017, it would take a vast effort to catch up with Google’s Android OS, in terms of both engineering and marketing. Huawei would also face an uphill effort in convincing third parties to develop versions of their apps compatible with the new OS; failure to attract all the big names to its own OS played a large role in the failure of the Windows Phone.