Trump administration may take Huawei off of blacklist

Updates on US indictments against Huawei Jan 31

This weekend, U.S. President Donald Trump and Chinese President Xi Jinping had a very productive conversation at the G20 Summit. After the conference concluded on Sunday, Trump announced American companies could once again sell products to embattled Sino tech corporation Huawei. However, the commander in chief noted that U.S. firms couldn’t perform transactions that might threaten national security.

The American president said he’ll discuss the U.S. Department of Commerce’s blacklisting of Huawei later this week. Trump also stated the corporation’s ability to do business in America would be dependent on forthcoming trade negotiations with China.

The president declined to provide a timeline for future trade talks or for removing Huawei from the federal government’s entities list.

Manage your supply chain from home with Sourcengine

Market Implications

If the Trump administration allows unlicensed transactions with Huawei to recommence, the impact on the technology industry will be significant. Most prominently, the firm might revive its faltering business thanks to the lifted trade restrictions. In July, company CEO Ren Zhengfei predicted the conglomerate would lose $30 billion over the next two years. Free from U.S. antagonism, the firm can once again pursue its goal to become the world’s largest smartphone maker.

Additionally, chipmakers like Micron, Intel, and Broadcom, which derive significant revenue from selling chips to Huawei, can raise their 2019 financial forecasts. Indeed, the firm’s reentry into the semiconductor sector may expedite the segment’s predicted 2020 resurgence.

If Huawei is permitted to purchase U.S. tech again, it will be able to buy Android licenses for its new handsets. Before this weekend’s trade talks, the corporation was preparing to launch its own mobile operating system. However, the company can now avoid the difficult task of introducing consumers to new, non-interpolated mobile software.

Chinese electronics manufacturer Foxconn could also enjoy a revenue boost if the U.S. government no longer targets Huawei. Last month, the tech giant suspended production on Huawei’s handsets due to its trade issues. With its ability to procure American chipsets restored, Huawei might ask Foxconn to reopen its assembly line soon.

Possible Impact on Apple

Aside from Huawei itself, Apple is the tech corporation that would be most affected by the Trump administration’s changed perspective on the Sino device maker.

On the one hand, the firm reportedly ramped up iPhone production to take advantage of Huawei’s unstable position. On the other hand, Apple might benefit from Huawei’s potential return to the U.S. mobility market. Recently, Beijing considered issuing a domestic ban on all of the Cupertino, California company’s products. As the Silicon Valley giant derives 20 percent of its income from China, a local blacklist would devastate its profitability.

Furthermore, the Commerce Department’s whitelisting of Huawei would represent a significant de-escalation of the U.S.-China trade war. If the two superpowers can resume normal relations, Apple may reconsider relocating its supply chain.

A few weeks ago, the iPhone maker reportedly asked its component suppliers to do a cost analysis of moving their manufacturing facilities out of China. A new Sino-American trade deal might prompt the firm to scrap its costly and time-consuming sourcing reorientation.