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U.S. Tech Suppliers, Including Google, Restrict Dealings With Huawei After Trump Order

LONDON — The Chinese technology giant Huawei on Monday began to feel painful ripple effects of a Trump administration order that effectively bars American firms from selling components and software to the company.

The companies said that Google was cutting off support to Huawei for many Android hardware and software services. The move, a response to the administration’s order last week, could hamstring Huawei, the world’s second-largest smartphone maker, by restricting its access to future versions of the Android operating system. Google is also limiting access to popular applications like Maps, Gmail and the Google Play store in future Huawei handsets.

By isolating Huawei, the Trump administration is escalating its dispute with Beijing and harming a company that the American authorities have accused of posing a national security risk, charges that Huawei has vehemently denied. After struggling to convince allies like Britain and Germany to block the use of Huawei telecommunications equipment, the United States is now undermining the Chinese company’s business by moving to cut it off from crucial American suppliers, including the makers of semiconductors.

The quick action by Google shows how some of the world’s largest companies are entangled in the growing Cold War between the United States and China over technology and trade. The global technology industry has flourished in part because of the borderless nature of its digital products and services. It is now scrambling to account for the potential damage of a trade dispute between the world’s two largest economies.

Google’s change applies to new Huawei devices and future versions of the Android operating system. Security and feature updates will still be available for Huawei users with Google apps already loaded on their devices.

“We are complying with the order and reviewing the implications,” Google said. The company’s decision to halt work with Huawei was first reported by Reuters.

[Tech stocks sink after Google restricts Huawei’s access to Android.]

By adhering to the Commerce Department’s order, Google is undercutting ties with an important and fast-growing partner. Huawei’s smartphone sales in the year’s first quarter grew 50 percent compared with the same period a year earlier, even as the broader handset market stagnated, according to the market research firm IDC. Google gets revenue from ads that are shown with the apps carried on Huawei devices.

Huawei smartphones and some of its other products have effectively been kept out of the United States for years, but the company’s business has grown rapidly in Africa, Asia and Europe, where its affordable prices have been embraced by consumers and by phone companies that use its antennas, base stations and other equipment to make wireless networks.

President Trump last week issued a ban prohibiting American telecommunications firms from installing foreign-made equipment that could threaten national security. The order instructed the commerce secretary, Wilbur Ross, to stop transactions “posing an unacceptable risk.” Although the order did not single out specific companies, it was widely believed to be directed at Huawei and others in China’s tech sector.

On the same day, the Commerce Department added Huawei to a list of companies deemed to be national security risks, effectively preventing it from buying or licensing American parts and technology without special permission from Washington.

Since then, chip makers, including the German supplier Infineon, have said they would restrict their business dealings with Huawei. “In any market where Infineon operates, we fully comply with all applicable legal requirements, laws and regulations,” the company said in a statement.

Intel and Qualcomm, two of the world’s largest makers of chips, have also told employees to cease working with Huawei until further notice, according to Bloomberg. Intel declined to comment, and Qualcomm did not respond to requests for comment.

On Monday, shares in Qualcomm and Infineon were trading about 5 percent lower; Intel was down more than 1 percent. Shares in Alphabet, Google’s parent, were down about 1.6 percent.

China has not said whether it plans to retaliate against the United States in response to Mr. Trump’s move. Investors sent shares of Apple down more than 3 percent in trading on Monday amid concerns that the company’s dependence on China to manufacture and sell iPhones made it a potential target.

The American campaign against Huawei coincides with preparations by countries around the world to build the next-generation wireless networks known as 5G. The new networks are expected not only to bring faster cellular service, but also to connect new devices like medical tools, industrial equipment and autonomous cars to the internet.

The actions put pressure on American allies that have so far resisted urging from the Trump administration to issue complete bans against Huawei. James Lewis, a senior vice president and the director of the technology policy program at the Center For Strategic and International Studies, said that most European countries would prefer a softer approach.

“I don’t think Europeans realize the extent of the strength of feelings in the U.S. that we need to block Huawei,” Mr. Lewis, a former official at the State and Commerce departments, said.

The actions will test the durability of Huawei’s business, which has long depended on access to products from American companies. The orders are reminiscent of sanctions imposed by the United States in 2016 against ZTE, a smaller Chinese telecommunications firm.

ZTE was added to the Commerce Department’s so-called entity list after the company was found to be violating rules against selling American-made goods to Iran. ZTE initially agreed to pay a large fine, but the Commerce Department said the company was not abiding by its agreement’s terms. American companies were barred from selling to ZTE, which nearly collapsed before Mr. Trump eased the penalties.

Huawei has not said how it plans to respond to the Trump administration’s order, but on Monday the Chinese government suggested the possibility of a legal challenge. Asked about Google’s decision at a regularly scheduled news briefing on Monday, Lu Kang, a spokesman for the Ministry of Foreign Affairs, said, “China encourages Chinese companies to take up legal weapons to defend their own legitimate rights.”

In a statement, Huawei said, “We have made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefited both users and the industry.”

Source: NYT

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