President Donald Trump’s decision to blacklist Chinese electronics manufacturer Huawei has had a significant impact on the entire tech sector. Google exiled the conglomerate from its Android ecosystem, which caused U.K. and Japanese telecoms to delay releasing the company’s newest smartphones.
Apple’s Loss is Huawei’s Gain
The South China Morning Post reports the region’s longtime Apple buyers are now becoming Huawei customers. The publication spoke to local market analysts who noted Chinese consumers resent America’s ban on the homegrown telecommunications company. Combined with a recent surge in patriotism, the nation’s citizens are now retiring their iPhones and buying new Huawei handsets.
In 2018, the iPhone maker represented 9.1 percent of the Chinese smartphone market. The corporation lost three percent of its market share to Huawei in the first quarter of this year. Analysts blamed the shift on the fact that the Chinese manufacturer offers more advanced handsets at better prices.
As Apple derives 20 percent of its income from China, the decline of its smartphone segment in the region has taken a big bite out of the firm’s profits. However, if a popular anti-Apple movement takes root in China, the California-based company could face even steeper revenue declines.
In part because of the recent drop off in its device sales, Apple is rebranding as a services company. However, if the corporation’s Chinese business goes off a cliff, its ability to facilitate systemic transformation will be hampered.
A Light at the End of the Tunnel?
Washington’s recent moves have inflicted potentially terminal damage on Huawei, but a recent press conference suggests the firm’s position might improve soon.
On Thursday, President Trump addressed the media and reiterated his position that Huawei is a threat to national security. However, the commander-in-chief also said he’d be open to letting the conglomerate partner with American companies again if China agrees to more favorable trade terms.
Though ethically dubious, the President’s statement indicates he’d be willing to take Huawei off his blacklist if China plays ball. On the one hand, the U.S. government probably shouldn’t give a free pass to a firm that’s allegedly funded by Chinese espionage agencies. Additionally, the Trump Administration appearing to attack a foreign company for economic rather than security reasons sets a disturbing precedent.
If Huawei experiences a significant market contraction or has to shut down, Beijing might attack a large American tech corporation in retaliation.
On the other hand, the President’s trade gamesmanship could potentially benefit both the U.S. economy and Huawei. By threatening Chinese President Xi Jinping’s long-term economic ambitions, Trump could prompt a domestic crackdown on the unethical practices of certain Sino-based corporations. As a result, American businesses could increase their foreign earnings by doing business on a level playing field.
Conversely, if Washington lifts its sanctions on Huawei, the smartphone maker could return to the U.S. market. The company could make billions selling its high-performance, low-cost hardware without restriction in the world’s third-largest mobility market.
At this point, Huawei’s future hinges on the duration the of U.S.-China trade war. Presidents Trump and Jinping will next meet at the June G20 summit.