On Monday, the Trump administration made two new announcements regarding controversial Chinese conglomerate Huawei. The U.S. Department of Commerce will extend the trade ban exemption it made following its blacklisting of the Sino corporation in May by 90 days. However, Commerce Secretary Wilbur Ross added 46 Huawei-affiliated companies to his agency’s Entity List. Consequently, US-based businesses won’t be able to do business with those firms once the 90 days are up.
Why Washington is Granting Another Exemption
During an interview on Fox Business, Ross explained his department granted a second trade ban extension to help rural telecommunications businesses that utilize Huawei made equipment. “We’re giving them a little more time to wean themselves off,” noted the official. Now, those firms will have until November 19 to find new vendors for their telecommunications equipment.
Ross also said President Trump decided to extend the exemption following a July meeting with several technology industry executives. Nevertheless, the Commerce Department’s move shouldn’t be taken as a sign that Washington has changed its opinion of Huawei. On Sunday, the President indicated that a third extension would be unlikely and the government considers it a threat to national security.
Huawei reacted derisively to the federal government’s trade ban exemption extension. The corporation issued a statement saying the move wouldn’t have a meaningful impact on its business. Furthermore, the company called the Commerce Department’s new sanctions against 46 of its affiliates “politically motivated.”
‘Live or Die Moment’
A new report from Bloomberg revealed how the U.S. government’s sanctions had affected the world’s number two smartphone manufacturer.
Recently, Huawei founder Ren Zhengfei sent out an internal memo warning the company is facing a “live or die moment.” To persevere, the billionaire wrote, the firm’s underutilized employees need to team up in “commando squads” to develop new projects. Furthermore, Ren said that commandos who do well would receive promotions. Conversely, he revealed failing employees would be moved to new positions and would incur pay cuts.
In July, the Sino conglomerate reportedly laid off hundreds of its American-based workers.
The Bloomberg report also revealed Huawei internally predicts it will sell 60 million fewer phones because of the U.S. sanctions. Though Washington largely pushed the firm out of the American handset market some time ago, its place on the Entity List has hurt its international reputation. Indeed, in late May, wireless carriers in Britain and Japan delayed launching the firm’s new devices citing security concerns.
Furthermore, the report indicates Huawei struggled to cope with its loss of access to Google’s Android mobile operating system. Following Washington’s blacklist, the company adopted a 24-hour day and put more than 10,000 developers on a three-shift system. The firm’s leadership tasked its engineers with developing new hardware and software to replace the U.S. products it uses.
Subsequently, Huawei debuted a new multipurpose operating system, HarmonyOS, earlier this month. It’s even released a new smart TV, the Honor Vision, that runs on the interoperable operating system. Still, the firm will likely face an uphill battle selling international consumers on a non-Apple/Google mobile OS.
Even if the Trump administration changes its hard-line stance, its sanctions will haunt Huawei for years to come.