Three months to get things in order — a delay or a formality?
After the general public became aware of restrictions on working with Huawei for American companies and any companies that use American technology, this led to a downward movement of the stock market. Markets began to collapse not only in Asia, but also in the United States, 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 reach an agreement. Unfortunately, this is a ruse and no attempt will be made to negotiate. 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 corresponding warning.
Why does the US need a 90-day exemption from sanctions 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 relief in any way.
During the 90-day period, no American company can enter into new contracts with Huawei and its subsidiaries. It is also prohibited to expand existing contracts. I will give an example that will explain this point. Qualcomm supplies Huawei with a number of components, which, in turn, are produced in third-party factories.
Huawei pays for these components, since they are necessary for the production of smartphones; without them, the devices cannot be assembled at the factory. Some of the components have already been produced, and the ban on working with Huawei means that Qualcomm will not be able to supply them. Those same 90 days are needed for shipments to go through and for Qualcomm not to suffer as much as it could.
But if Huawei tries to increase the volume of purchases, expands the list of components, tries to create additional stock, it will be refused, since this will be a violation of sanctions by Qualcomm. Only execution of existing contracts and within the scope/time agreed upon. 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 United States has issued such approvals in the past, and there is no reason to believe that there will be any now.
The founder of Huawei said that a three-month delay does not change anything in the situation for the company, and this is absolutely true. In fact, we are saying that this is a safety net for American companies, but not Huawei. And here there is one mean thing that will most likely happen to Huawei, a lack of agreement on the part of its partners in the United States.
Purchasing components for Android smartphones is only necessary in one case: if you are able to not only produce, 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 obtain a full version of Android with GMS, and accordingly, it will be impossible to sell such devices.
It is believed within Huawei, 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 purchasing such a smartphone, the user will not encounter activation problems and will be able to use Google services.
But this is an unlikely scenario, since the game against Huawei is aimed at eliminating the company from the market. No one is going to give Huawei the opportunity to sell their smartphones. It is not so important what exactly Google says or thinks; they are hostages of the situation and will have to comply with the rules of the game imposed by the US Department of Commerce.
We see manipulation by Huawei management when they try to create the illusion that the plan to retain market share can work and there are no risks. This is easy to do if people are willing to believe it and have commercial motives. But this is a political decision, and Huawei will not be given a reprieve or room to maneuver.
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. Here, two issues are being resolved at the same time — American companies are not losing as much money as they could, plus in the future a financial blow will be dealt to Huawei. Beautiful. And this is a reality that will happen with maximum probability; you definitely shouldn’t expect any relaxation.
Users of Huawei smartphones and tablets – what should they do and how will everything happen
Google’s refusal to provide anything to Huawei 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; this will stop the development of new products on this platform with Google services. In the near term, Huawei will have problems with new Android products for most of the world, the exception being 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, they will appear for Huawei devices. This is not a secret that is kept sacred by Google. 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 the firmware is not a very complicated process. And Google is not interested in devices without the latest security updates.
Theoretically, you can turn on paranoid mode and assume that Google may bookmark Huawei smartphones in security patches that will disable them (that is, smartphones will be turned into bricks for violating sanctions), but this is unlikely, the situation is so petty It’s unlikely to come.
Therefore, those who use Huawei/Honor smartphones today can safely use them, there are no problems with them and there will not be any. Firmware will be released, security patches will appear. There won’t be new versions of Android, but that’s not a big blow for most.
For those who are planning to purchase 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 and warehouses will actually turn into bricks, and Huawei will suffer big losses, since it will be forced to compensate this money to partners and take away the goods.
There are no shutdowns of already sold, working smartphones and are not planned. They will work exactly the same as they do today. Therefore, there is no need to panic and say that sanctions are retroactive and are imposed even against old devices; this is not true.
Considering how much this topic has become media, we can say that a wave of Huawei/Honor sales on the secondary market has begun. Buyers argue that the cost of such devices will soon drop sharply, they will lose in price. Therefore, they are beginning to saturate the secondary market with offers for Huawei, which is clearly visible on a number of sites.
Retail chains have not yet discounted this product or reduced prices. It is interesting that a number of major players reduced 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 on the part of buyers are negative; they expect that, having fallen under sanctions, Huawei will begin to sell goods for next to nothing.
Moreover, current prices are beginning to seem unfair to buyers. On Monday and Tuesday in Russia there was a decline in sales of Huawei/Honor week by week (by about 20%), there was no similar decline for other brands, and a slight increase in sales of Xiaomi and Samsung. That is, buyers who were focused on Huawei, while taking a wait-and-see attitude, pent-up demand arose.
Huawei mission
We create value for our clients. In cooperation with telecom operators, Huawei has already built more than 1,500 networks, thanks to which a third of the world’s population has access to the Internet. We help our enterprise clients build flexible networks, including those based on open cloud platforms, thereby increasing operational efficiency and facilitating dynamic innovation in areas such as urban security, finance, transportation and energy.
We contribute to the development of the industry. Huawei supports the principles of openness, cooperation and shared success. By joining forces to develop innovative products and solutions with our partners and colleagues, we add value to information and communications technologies by creating a sustainable ecosystem of mutually beneficial collaboration.
Huawei actively participates in more than 300 standards organizations, industry associations and open source communities. The company has already contributed more than 43,000 standardization proposals, promoting more effective industry collaboration. We work with partners to innovate in fast-growing areas such as cloud computing, software-defined networking (SDN), network function virtualization (NFV) and 5G. Together we ensure the continuous development of the industry based on productive cooperation.
We stimulate economic growth. In countries where Huawei does business, tax revenues increase, new jobs are created and the formation of the ICT value chain is stimulated. But more importantly, the company brings to the market innovative ICT solutions that contribute to the digital transformation of all sectors of the economy and, accordingly, economic growth and a significant improvement in the quality of life.
We contribute to sustainable development. Upholding the principles of corporate citizenship, Huawei is making significant efforts to bridge the digital divide. We are acutely aware of the important role that telecommunications plays in emergency situations that require rapid response, such as in areas of West Africa affected by the Ebola epidemic, during radioactive contamination in Japan after the tsunami, and after the powerful earthquake in Sichuan (China), when our Specialists have made every effort to restore communication networks in the affected regions and ensure the uninterrupted operation of critical telecommunications equipment.
We provide dedicated employees with ample opportunities for growth. One of Huawei’s core values is to enhance employee engagement in a variety of ways. Evaluation of employee performance and selection for leadership positions are carried out in accordance with the results achieved and the degree of responsibility.