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How much trouble is Chinese firm Huawei involved in?

21:26 | 07/07/2020

The situation is getting increasingly difficult for the Chinese company Huawei. New US sanctions, the decision to remove Britain's 5G Huawei equipment and the recent China-India tensions are all putting Huawei under great pressure. 

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how much trouble is chinese firm huawei involved in
Huawei is under great pressure (Photo: BBC)

The US sanction puts Huawei under danger

According to CNN, the latest US sanctions have cut off Huawei's access to vital American technology to a greater extent. Countries around the world are now wondering if Huawei will be able to deliver on its 5G promise.

The US Secretary of State Mike Pompeo last month declared that "the tide is turning against Huawei as citizens around the world are waking up to the danger of the Chinese Communist Party's surveillance state."

Carisa Nietsche, a researcher at the US Security Center, said many of the larger economies in Europe, such as the UK, France and Germany, have yet announced a complete ban on Huawei.

how much trouble is chinese firm huawei involved in
Inside a Huawei factory (Photo: Techtimes)

Huawei has been in this challenging scenario before. Last year, the US government banned companies from selling technology to Huawei without permission. Huawei stockpiled inventory and found alternative suppliers. As a result, they kept up stable business performance despite the US ban.

However, Huawei's international smartphone sales plummeted, because new products cannot access Google apps. Although the company recorded good business result in 2019, Huawei claimed that 2020 would be a difficult year.

The latest sanctions from the US have a greater impact than last year's ban. Companies using US equipment and software will not be able to supply Huawei chips without a license from Washington. The new rules will restrict firms like TSMC from exporting computer chips to Huawei.

how much trouble is chinese firm huawei involved in
A Huawei showroom in Beijing (Photo: Reuters)

"I really think that Huawei's 5G equipment business is in danger," Jefferies analyst Edison Lee said. "There's a big risk that Huawei will stop being able to provide 5G equipment from early next year", he added.

Huawei spokeswoman Evita Cao said it opposes the latest US sanction, calling the new rule "discriminatory."

"It will have a serious impact on a wide number of global industries and damage collaboration within the global semiconductor industry," Huawei said in a statement. "We expect that our business will inevitably be affected," it added.

how much trouble is chinese firm huawei involved in
A Huawei smartphone (Photo: movertix)

Reactions by Europe and India

In addition, reports from the United Kingdom state that the country will strip Huawei equipment from its 5G networks by the end of the year. And the potential cause of this move lies in China's tense relationship with the US, informed Notebook Check.

Huawei is currently caught up in the US - China tensions, with growing suspicion from Europe and India. The pandemic makes these relationships more stressful. Europe is also concerned about the unbalanced trade and investment with China. Germany may even eliminate Huawei from joining their 5G network.

Huawei can also be banned from participating into India's 5G network, just months after it was given the green light to take part in the country's trials for the technology. This comes after India claimed that they would block Chinese apps due to the threat to national security. The China - India border fight is definitely a factor contributing to this move by Indian government, CNBC reported.

Therefore, Huawei is facing lots of challenges due to the US sanctions, the British decision and China-India tension. Actions by Europe, the US, and India show that in the coming years, Chinese investment activities will certainly be not easy.

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Candy Lee