What is the threat of a ban on Huawei?
Who of you losers has a Huawei? If you already have it, fine, let it be. But if you are planning to buy one, the fuck are you thinking about? When did you last read the news? For those who have spent the last few weeks in a cave on a deserted island — President Trump banned Huawei. In a nutshell.
And here we have all the things going crazy now.
Such a massive thing couldn’t but affect a lot of companies all over the world. Cos we understand that if such players like America and China start a quarrel, everybody is going to be dragged in it whether they want it or nor.
So, now the British market got involved as well. ARM, a British mobile device software design firm, has issued an order for its staff so they would stop working with Huawei, which is one of the biggest smartphone companies in the world now having overcome even Apple in 2018, and its affiliated companies. The BBC reported that it was done on grounds of Trump’s ban issued not so long ago.
The executive order that the President of America signed just a few days ago prohibits foreign companies and individuals to buy technologies and services as well as some other things from the United States unless they get special approval from the American government. And as you may guess, this approval ain’t that easy to get. For someone. That’s not what we understood under “great America” but that’s what we’ve got today.
Huawei and SEVENTY! of its subsidiaries were added to a blacklist. Well, they don’t call it like that. The U.S. Commerce Department, which is in charge of that calls it Entity List and this document declares restrictive licensing requirements to buy part and component manufactured in the United States.
Now, what does it have to do with Britain? Nothing, but it has something with Japan. ARM, although named British, is owned by Japan’s Softbank’s Vision Fund. So what you may ask? So that this investment fund has eight offices located in the United States. It seems it feels like being affected by the ban ordered by Trump’s administration as it uses technology originated from America in its designs. Gosh, why is everything so complicated?!
Faster Than the Speed of Light
Senior analyst at IHS Markit Gerrit Schneemann commented on the situation saying that “this story is changing so much so quickly, it’s hard to say anything definitive.” And he is absolutely right: everything changes so rapidly you might have easily missed one or two steps in this story. Being as kind as we are, here you have a brief retelling of what has happened in the last few months.
– Trump announced his ban
– Google said “fuck off” and cut access for Huawei to Android updates and Google apps;
– One day after signing his executive order, Trump said “oh, ok” and gave Huawei an extension of ninety days to 19th of April for products and services already existing;
– Google said “shit, too soon” and did the same as Trump extending its services;
– Main chip-making companies Intel, Qualcomm, Xilinx, and Broadcom all refused to continue selling their products to Huawei;
– The market said “let’s have some fun” and stock prices of the mentioned chipmaker nose-dived right after the news;
– The rest of the world said “me too” and…
– British network EE owned by Telecom announced an intention to exclude Huawei smartphones from devices approved for its upcoming 5G services;
– The United Kingdom top-three mobile operator Vodafone is launching its new online network on the 3rd of July and said that the Huawei Mate 20 X 5G will be excluded from selling there;
– Large-scale Japanese mobile providers KDDI and Softbank said they will put off selling new smartphone models from Huawei for their Au and Y! mobile services that are coming soon;
– Another Japanese mobile carrier NTT Docomo is going to stop taking orders for new Huawei headsets;
– And, to top it all, Microsoft took its part in ignoring Huawei and stopped selling the Huawei MateBook X Pro online. Boom!
Principal analyst at the Enderle Group Rob Enderle said that the moves from Google and Microsoft “are likely the most painful because once the stay is lifted, that will deny patches for Huawei customers’ devices.” In his comment to the E-Commerce Times, he also added that it would make Huawei’s related products excessively risky for buyers. Truly so, I don’t know anyone who would want to buy a phone that doesn’t work with Google services. Probably the Chinese themselves, they don’t have it working anyway.
“I’m sure there’s a better-safe-than-sorry element to [cutting ties with Huawei] — not just for ARM, but in general,” Schneemann told the E-Commerce Times.
Patchwork Quilt
The reason behind the ban, as it is stated, is national security. But come on, who would believe that! Chris Taylor, research director at Strategy Analytics, says basically the same: it isn’t about the hardware.
“If governments and consumers are worried about security and privacy, they should ban or regulate Google, Internet-tracking apps, Android, Facebook, Twitter, and most apps running on phones,” he told the E-Commerce Times.
The true reason for all these ridiculous moves is, according to Taylor, that putting Huawei in this position makes it kind of a hostage to have an advantage in trade negotiations with China. They “set a bad precedent and are not warranted.”
But not everyone sees these sanctions as something horrible and fucked up. Ray Wang, a principal analyst at Constellation Research, said that banning the export of some serious and important stuff to its allies allowed preventing selling supercomputers to Russia and states that espouse terrorism.
“The Huawei ban is a continuation of the greater discussion beyond trade. We are dealing with national security, trade, sovereignty, and different world views,” he told the E-Commerce Times.
But that’s not even all. The United States is also thinking about adding five Chinese video surveillance vendors to their blacklist. Why? Because of how the Chinese government treated its Muslim Uighur minority. Seems legit, no?
Making Companies Poor Again
First goes Samsung. Then goes Apple. Went Apple, until in 2018 Huawei took its place and became the second-biggest smartphone equipment manufacturer. According to IHS Markit, in the first quarter, only Huawei had fifty-nine million units shipped worldwide.
Huawei’s chipsets Kirin are based on ARM technology. The ARM sales from 320 million dollars to 345 million annually, if to believe Ray Wang from Constellation Research.
As the result of having every edge possible cut off, Huawei has promised to develop its own technology, including a smartphone OS to replace Google’s Android. Can you imagine how much time and money and human resources it may take? But we are talking about the #2 smartphone manufacturer in the world, so let’s sit and wait.
The ban will make lame most if not all of the ARM’s plans on 5G services and business outside China. And it also will result in mammoth problems with IP in China adds Rob Enderle.
Reuters reports that last year Huawei spent about twenty-one billion dollars on chips from outside vendors. And its own chip division HiSilicon manufactured seven and a half billion worth of chips.
Enderle noted that China will face a necessity to find a replacement for ARM and x86 processors which could lead to global processor producers losing a shitton of money on the Asian market.
Other companies that will feel the impact of the ban are:
– Corning Gorilla Glass;
– Micron Flash storage;
– Skyworks and Qorvo 3G and LTE chips;
– Chip design software vendors Cadence Design Systems and Synopsys; and
U.S. suppliers of specialty lasers and modules such as NeoPhotonics, Lumentum, and Finisar.
Killing 5G Hopes
As it all keeps snowballing, it is still unclear how this ban will impact Huawei’s telecom networking customers.
According to the Dell’Oro Group. Huawei’s share of the global telecom equipment market goes up to twenty-nine percent. Freaking twenty-nine percent! I feel sorry for all those people. Cos they are not guilty of anything except for not buying an Apple smartphone.
Huawei is definitely a huge player when it comes to the 5G market. The United States ban “will make the wireless industry more dependent on 5G infrastructure equipment that’s not as advanced as Huawei’s,” noted Taylor from Strategy Analytics.
As some of the contracts have already been awarded to Huawei, he continued, it will end up raising the cost and delaying the rollout. “Strategy Analytics is still trying to quantify this.”
Enderle said a word of warning that in the end, Huawei can become the dominant 5G player in China, while Western countries will get locked out of that market area. And who to blame, ah?
Eventually, it’s all China versus the United States, said Wang. And the rivalry of those two camps will expand further into networking, chips, 5G and IoT standards.
