Three months to put things in order – a delay or a formality?
After the general public became aware of the restrictions on working with Huawei for US companies and any companies that use US technology, this led to a downward movement in the stock market. Markets began to collapse not only in Asia, but also in the US, since no one expected anything positive from this news, investors were, to put it mildly, discouraged.
And against this background, the news that there are 90 days during which work with Huawei is still possible was perceived by the market as positive news, an attempt to negotiate. Unfortunately, this is a trick, and no attempt will be made to reach an agreement. Moreover, the 90-day period was initially known from May 16, Huawei and the general public did not know about it, but the largest American companies received a warning.
Why does the US need a 90-day exemption for Huawei? The answer is obvious – during this period, companies must ship to Huawei those goods and products that were produced under their contracts, and receive money for them. This is a protection of the interests of American companies, but not an indulgence in any form.
Within the 90-day period, no US company can enter into new contracts with Huawei and its subsidiaries. It is also forbidden to expand existing contracts. Let me give you an example to explain this point. Qualcomm supplies a number of components to Huawei, which, in turn, are manufactured in third-party factories.
Huawei pays for these components, as they are necessary for the production of smartphones, without them it is impossible to assemble devices at the factory. Some components have already been produced, and the ban on Huawei means that Qualcomm will not be able to supply them. Those same 90 days are needed for shipments to go through and Qualcomm did not suffer as much as it could.
But if Huawei tries to increase the volume of purchases, expand the list of components, try to create additional stock, it will be rejected, as this would be a violation of sanctions by Qualcomm. Only the execution of existing contracts and within the scope / time that are agreed. Exactly the same scheme applies to any American company, exceptions are possible only for contracts that have been approved by the US Department of Commerce. There are no examples of the US issuing such approvals in the past, and there is no reason to believe that they will now.
The founder of Huawei said that the delay of three months does not change anything in the situation for the company, and this is absolutely true. In fact, we are talking about the fact that this is an airbag for American companies, but not Huawei. And here there is one meanness that is likely to happen to Huawei, a lack of agreement on the part of partners in the United States.
Purchasing components for Android smartphones is needed only in one case: if you are able not only to manufacture, but also then sell these devices. At the moment, Google has stopped certifying Huawei / Honor smartphones, that is, the company will not be able to get a full version of Android with GMS, respectively, and it will be impossible to sell such devices.
Inside Huawei, it is believed, and this information is broadcast to both employees and partners, that all smartphones produced within three months and delivered to retailers or operators will not be blocked by Google. That is, in the second half of August, when buying such a smartphone, the user will not encounter an activation problem, and will be able to use Google services.
But this is an unlikely scenario, as the game against Huawei is about knocking the company out of the market. Nobody is going to leave Huawei the opportunity to sell their smartphones. No matter what they say or think at Google, they are hostages of the situation and will have to abide by the rules of the game imposed by the US Department of Commerce.
We see manipulation by Huawei management when they are trying to create the illusion that the plan to retain market share can work and there are no risks in it. This is easy to do if people are willing to believe in it and come from commercial motives. But this is a political decision, and Huawei will not be given a reprieve or an opportunity to gain wiggle room.
This is an excellent lever that the US administration will use. And there is no doubt that the purchase of components and the appearance of a stock of phones are direct losses for Huawei. Two issues are being resolved here at the same time – American companies are not losing as much money as they could, plus a financial blow to Huawei is inflicted in the future. Handsomely. And this is a reality that will happen with the maximum probability, it’s definitely not worth waiting for concessions.
Users of Huawei smartphones and tablets – what to do and how everything will be
Google’s refusal to provide Huawei with anything will result in the company not receiving new versions of Android, as well as security updates. I have repeatedly heard that this will make Huawei / Honor smartphones dangerous, for example, it will be possible to steal money from a banking application. The reasoning is stupid and has nothing to do with life.
Indeed, Huawei will not be able to use Android, which will stop the development of new products on this platform with Google services. In the short term, Huawei will have problems with new Android products for most of the world, with the exception of China, which uses Android without GMS. That is, at the moment when other manufacturers begin to show an updated line of devices in late summer – early autumn, Huawei / Honor will have absolutely nothing. And this is a strong blow to the company’s position in the world.
But if we talk about Android security patches, then they will appear for Huawei devices. This is not the kind of secret that Google keeps sacred. Yes, Google will not officially transfer such patches to Huawei, but they will not be able to prevent the company from integrating them. Moreover, integrating patches into firmware is not a very complicated process. And Google is not interested in devices without the latest security updates.
Theoretically, you can turn on the paranoid mode and assume that for Huawei smartphones, Google can bookmark security patches that will turn them off (that is, I will turn smartphones into bricks for violating sanctions), but this is unlikely, the situation is unlikely to come to such petty.
Therefore, those who use Huawei / Honor smartphones today can safely use them, there are no problems with them and there will not be. Firmware will be released, security patches will appear. There won’t be new versions of Android, but for most, that’s not such a big hit.
For those who are planning to buy a smartphone of these brands, it is important to be able to activate it, problems could potentially begin in the second half of August, when Google will not allow them to be activated. And here everything that is on the shelves, warehouses, will actually turn into bricks, and Huawei will suffer big losses, as it will be forced to compensate this money to partners, to pick up the goods.
There is no shutdown of already sold, working smartphones and is not planned. They will work exactly the same as today. Therefore, you should not panic and say that sanctions are retroactive and are introduced even against old devices, this is not so.
Considering how much this topic has become media, we can say that a wave of sales of Huawei / Honor in the secondary market has begun. Buyers argue that the cost of such devices will soon drop sharply, they will lose in price. Therefore, they begin to saturate the secondary market with a proposal for Huawei, which is clearly visible on a number of sites.
Retail chains do not throw off this product yet, do not reduce prices. Interestingly, a number of major players lowered prices for Honor literally on the day the sanctions were announced, but this is a coincidence. The price reduction was planned, and no one could have prepared it in a matter of hours. Expectations from buyers are negative, they expect that, having fallen under the sanctions, Huawei will start selling goods for next to nothing.
Moreover, current prices are beginning to seem unfair to buyers. On Monday and Tuesday in Russia, there was a week-on-week decline in sales of Huawei / Honor (by about 20%), there was no similar decline for other brands, a slight increase in sales of Xiaomi, Samsung. That is, buyers who were focused on Huawei while they took a wait-and-see attitude, pent-up demand arose.
