When President Trump signed his executive order regarding Huawei and placing the company on the US Entity List, US companies and partners were forced to follow suit. Now, US companies and partners are trying to ease the Huawei Ban due to their own profit declines, Reuters reports.
US chipmakers Intel and Xilinx met with the Commerce Department after Huawei’s blacklisting to discuss a proper response to the company’s sales ban. Qualcomm contacted the Commerce Department as well, according to four people familiar with the matter. Both chipmakers say that not every part sold to Huawei pertains to national security and that only 5G networking gear should be banned. With regard to chipsets, SoCs, antennas, modems, and other smartphone components, American companies should be allowed to sell these to Huawei so as to continue churning a profit.
Huawei spent $70 billion on smartphone components in 2018, with some $11 billion going to American firms Qualcomm, Intel, and Micron Technology. With the Trump Ban in full force, those billions will go to someone else or Huawei will simply spend the same to make its own smartphone components. The Trump Ban will move Huawei to become more independent than before, relying even less on American firms. American companies will lose out financially.
Huawei is the second largest global manufacturer in the smartphone market, and even American companies cannot afford to shun Huawei and refuse their business without feeling the financial burn themselves.
To be sure, Huawei is feeling the financial impact. The company has admitted to sales decline in Spain, with a report showing sales decline in Germany. The company’s Honor 20 smartphone, going on sale in Britain and France later this week could be pulled at some point down the line if sales are disappointing. The company’s refresh of its Matebook laptop has been postponed indefinitely, and its foldable smartphone, the Mate X, won’t see market arrival this year.
The Chinese OEM is being forced to resort to tough measures to recoup money from the financial loss of the Trump Ban. For one, Huawei owns 15% of all 5G patents globally and is starting to call in patent royalties from big US carriers like Verizon Wireless. Huawei is asking Verizon to hand over $1 billion in patent royalties.
Next, Huawei is considering a second sub-brand under the “Nova” label with its Huawei Nova series of smartphones, a brand that would operate as an independent entity without the stain of the current Trump Ban and Huawei’s tarnished image. Image is everything in business. Approximately 65 million users in Huawei’s smartphone base are using the company’s Nova series, so perhaps a second sub-brand is possible and potentially lucrative. Speaking of the Nova moniker, Huawei intends to release its Nova 5 series with a “Nova 5 Pro” model in Wuhan, China this week on June 21st.
Huawei has recently come under scrutiny for placing Booking.com lock screen ads on some of its smartphones including the Huawei P20, P20 Lite, P30 Pro, and the Honor 10. Some smartphone users have found that disabling AppGallery. Huawei’s App Store, will disable the ads, but the sudden appearance of these ads is what makes them suspicious in nature. Not all Huawei users have the ads on their lock screens, but apparently, this is one of Huawei’s new ways to make money given its current financial situation.