After weeks of maintaining firm resolve in the midst of financial uncertainty, Chinese OEM Huawei Technologies Co. Ltd quantifies its financial loss from the Trump Ban to around $30 billion.
That’s the figure given by Huawei Founder and CEO, Ren Zhengfei, who says that Huawei will make an estimated $104 billion (721.2 billion yuan) this year, down from estimates of $125 billion-$130 billion before the Trump Ban declaration.
Huawei has said for weeks that it would be fine in light of the Trump Ban, but the ban itself has proven formidable. The Shenzhen-based corporation was taken aback by the Trump Ban because of how direct, intentional, and pervasive a financial attack it has proven to be. “We did not expect they would attack us on so many aspects. We cannot get components supply, cannot participate in many international organizations, cannot work closely with many universities, cannot use anything with U.S. components, and cannot even establish connection with networks that use such components,” said Ren.
The Trump Ban has truly been a full-scale attack on Huawei and all of its sources and streams of income. US President Donald J. Trump declared the Ban back in mid-May. Since then, all American companies that have done business with Huawei as a client, including foreign allies who rely on American patents, have had to withdraw from the Shenzhen-based manufacturer and deny them business.
Google started it, revoking Huawei’s Android license just days after the declaration by the President. Although the government has given Huawei a three-month reprieve, that too, will come to an end in a matter of weeks. What this means is that the government has effectively cut off Huawei’s use of Google’s Android software for its smartphones. This came just after US carriers Verizon and AT&T pulled Huawei phones from their inventory as a result of federal regulations and warnings from the government to not do business with Huawei.
Next came the onslaught of companies that supply parts for Huawei smartphones. British entity ARM, who’s known for its processor architecture in chipsets, refused Huawei business. American entity Qualcomm, known for its processors around the world, has refused business to Huawei — meaning that Huawei can no longer purchase Qualcomm SoCs.
Huawei’s own proprietary Kirin SoC is based on ARM’s processor architecture; without it, Huawei can no longer even make its own SoCs. It will be forced to do business with Chinese makers who may or may not be able to furnish the supply to meet the demand that Huawei handsets have in China.
Huawei also has the problem of delaying indefinitely products that it intended to bring to market this year. The company has decided not to release its foldable Mate X to the market, and the company’s updated new Matebook laptop is delayed until further notice.
Microsoft, Intel, Micron, and other companies have pulled away from Huawei as well. Left without a mobile operating system, Huawei has turned to its own in-the-shadows project. The company filed a trademark recently for “Hongmeng OS,” an operating system for entry-level to mid-range devices in China whose name in English means “primordial world.” The company won’t release this OS until September-October, and has said that Hongmeng is not ready for its flagships yet. What OS will the upcoming Huawei Mate 30 Pro flagship see this year? No one knows.
The company’s proprietary OS has been tested by Chinese OEMs OPPO and Vivo and found to be 60% faster than Google’s Android. What this means, though, is that Huawei’s high-end handsets don’t have an operating system at the moment, unless 1) Huawei is allowed to release its Mate series and high-end devices running Android 9.0 Pie, which seems impossible if the ban remains in effect, or 2) Huawei delivers Hongmeng to high-end devices as well.
There’s always the possibility of using Jolla’s Sailfish OS. Russia is in love with Sailfish OS, and Huawei could use it for its high-end security for governments and corporations. Additionally, Sailfish also has Android compatibility, something Hongmeng OS lacks at the moment.
Huawei has resorted to calling in 5G patent royalties as a way to recoup its financial loss, hitting at big companies such as US carrier Verizon Wireless for $1 billion. The company is considering a second sub-brand using its “Nova” series moniker, and doing its best to win Google Play developers to its AppGallery app store to make apps for its platform. The use of Booking.com lock screen ads this week was a mistake, but Huawei has seen the light and has retracted the ads from its phones. A company executive and report have confirmed sales declines in Germany and Spain.
Huawei is hard at work doing what it can to wage economic warfare against the Trump Ban, but Huawei says that it will not cut back on R&D, nor will it lay off employees in light of this new ban. The full effects of the ban won’t be accurately assessed until 2021 when CEO Ren Zhengfei says Huawei will rebound from the US-China trade war.