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How Huawei might handle the latest US sanctions

How Huawei might handle the latest US sanctions

BANGKOK, THAILAND - 2019/01/16: The Huawei logo seen displayed on a Android smartphone. (Photo by Guillaume Payen/SOPA Images/LightRocket via Getty Images)

Things were looking up for Huawei last month. Officials in the UK, Germany, and the European Union signalled they would defy US pleas to ban the Chinese telecommunications giant from building 5G wireless networks within their borders. Huawei also reported a 39 per cent increase in first-quarter revenue. Then, recently, the US Department of Commerce added Huawei to a list of companies considered a threat to US national security, meaning it would need permission to acquire US technology. Soon chipmakers like Intel and Broadcom reportedly stopped selling to Huawei, and Google pulled the company’s licenses for key mobile applications like Gmail and the Google Play app store.

When the Trump administration barred US companies from selling to Chinese telecom company ZTE last year, ZTE said it would halt operations. The Trump administration later backed down, but ZTE’s near-death experience demonstrates how reliant telecom companies are on US technologies. Huawei is not as vulnerable as ZTE was, analysts say. Huawei makes some of its own chips, has bigger stockpiles of components, and is not as reliant on its handset business as ZTE.

Huawei has been downplaying the consequences of the US export restrictions. “The current practice of US politicians underestimates our strength,” Huawei founder Ren Zhengfei told Chinese media, according to The Guardian. “Huawei’s 5G will absolutely not be affected.”